Crain's Detroit Business, May 23, 2022 by Crain's Detroit Business

A LEGACY: Joel Landy’s estate selling Detroit portfolio to fund foundation. PAGE 3

PAYING THE PRICE Michigan employers pay hospitals twice as much as Medicare, study shows. PAGE 3

CRAINSDETROIT.COM I MAY 23, 2022

DESROSIERS ARCHITECTS

GOOGLE MAPS

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GREATER EXPECTATIONS Demand for new homes has teardowns on the rise in metro Detroit. PAGE 8

DESROSIERS ARCHITECTS

A lifeline as foreclosures still sting

Program gives renters a way to stay in their homes when landlords fail

5-Hour Energy founder buys his own TV channel BY NICK MANES

BY ARIELLE KASS

Howtoria Whitehead was living with her mother in 2018 when she saw a house for sale on Craigslist for $1,500. She paid the seller, got the deed and started renovations, fixing holes in the walls, reattaching the gas line, upgrading the plumbing and tearing down a dilapidated garage. Then after seven months, she said, someone kicked in the front door and changed the locks. The deed, it turned out, was fake; someone else owned the Joy Community home. Whitehead said she was devastated. See FORECLOSURES on Page 17 Howtoria Whitehead lives in her home with her 10-year-old and twin 2-year-old daughters. | NIC ANTAYA FOR CRAIN’S DETROIT BUSINESS

Terms of the acquisition were not disclosed. Bhargava, a serial entrepreneur Like many in business these days, Manoj Bhargava has had to deal who owns an office and industrial with soaring inflation, which for the park in Farmington Hills where NewsNet, 5-Hour Energy’s owner of 5-Hour Energy, parent company and varitranslated to surging adous other affiliated compavertising costs. nies of his are headquarSo billionaire Bhargava, tered, is now in the midst of whose businesses are largewhat he says is a $50 milly privately held, decided to lion investment in the inseize the means of delivery. frastructure needed to Regulatory filings show boost the news channel that earlier this year, Bharfounded in 2019: building gava — through a subsidiout a 30,000-square-foot ary — became the majority Bhargava television studio and beefowner of NewsNet, a 24hour news channel available through ing up the staff. Much of that contraditional broadcasting networks struction is underway and is slated to and on streaming services like Roku, be complete later this year, according where the channel is currently available. See BHARGAVA on Page 16

NEWSPAPER

DESROSIERS ARCHITECTS

A POWERFUL MAGNET

How special electricity rates for GM’s massive EV investments helped seal the deal. PAGE 13

NEED TO KNOW

SUCCESSION PLAN

THE WEEK IN REVIEW, WITH AN EYE ON WHAT’S NEXT  HUDSON’S SITE PROJECT COST RISES

 CDC APPROVES PFIZER’S 5-11 KIDS BOOSTER SHOT

in city funding from the General Services Department’s parks budget.

THE NEWS: Bedrock LLC has updated the expected cost of its massive development on the site of the former J.L. Hudson’s department store in downtown Detroit. Dan Gilbert’s Detroit-based real estate company now says the development, which has been hampered by redesigns and construction setbacks, is expected to cost $991 million, about a 9 percent increase from the most recent publicly revealed price tag of $909 million.

THE NEWS: Younger children across the U.S. are now eligible to receive a COVID-19 booster shot developed by Pfizer Inc. and BioNTech SE after the head of the Centers for Disease Control and Prevention granted the final clearance needed for injections to begin.

WHY IT MATTERS: The new building is to replace the 5,600-square-foot Lenox Center, which has been vacant since 2013 and will be torn down.

WHY IT MATTERS: This is the first time since 2018 that the project, which is now expected to be finished in 2024, has updated the cost estimate.

 BAMBOO DEAL LETS MEMBERS WORK IN WINDSOR THE NEWS: Bamboo Detroit, which has co-working offices in downtown Detroit and Royal Oak, and the Windsor, Ontario-based Downtown Windsor Business Accelerator are offering the new cross-border membership for an additional $200 a month. Members have access to Bamboo and Accelerator space, mail services, client networks, programming and events. WHY IT MATTERS: The two co-working organizations on opposite sides of the Detroit River are collaborating to allow their members to go international.

2 | CRAIN’S DETROIT BUSINESS | MAY 23, 2022

 NEW CITY DIRECTOR OF CIVIL RIGHTS, INCLUSION THE NEWS: Detroit Mayor Mike Duggan has appointed Anthony Zander as the new director of the city’s Department of Civil Rights, Inclusion & Opportunity

WHY IT MATTERS: Making the shot available to school-age kids will provide much-needed protection against the contagious omicron subvariants spreading across the country.

WHY IT MATTERS: The 44-year-old will lead the city’s efforts to promote equity, inclusion and business opportunities in Detroit, including monitoring community benefits ordinances and mediating civil rights complaints. He will also oversee CRIO’s Office of Disability Affairs as well as the Office of Marijuana Ventures & Entrepreneurship.

 JEFFERSON CHALMERS GETTING COMMUNITY CENTER

 VERITÀ ACQUIRES NOMAD TOWER SERVICES

THE NEWS: A new community center in the Jefferson Chalmers neighborhood is being funded in part by the Penske Corp. The 8,100-square-foot building at the 34-acre Alfred B. Ford Park, expected to open in June or July next year, is getting $2.73 million from Penske’s $5 million contribution to Detroit’s Strategic Neighborhood Fund and another $3.95 million

THE NEWS: Verità Telecommunications Corp., based in Plymouth, has acquired Romulus-based Nomad Tower Services in Romulus. Terms were not disclosed. WHY IT MATTERS: The company plans a $6 million investment at a 40,000- to 60,000-square-foot facility on 10 acres in western Wayne County.

Stormy Kromer CEO to pass reins to daughter  The longtime CEO of the Upper Peninsula-based Stormy Kromer brand is handing over the reins to his daughter, who will be the first female leader of the iconic wool cap maker. Gina Jacquart Thorsen will be CEO of Stormy Kromer parent company Jacquart Fabric Products Inc., effective July 1, taking over for her father, Bob Jacquart, according to a Thursday news release. Promotion to the top spot of the company comes after Thorsen learned the cut-and-sew craft alongside her father growing up before eventually becoming president and co-owner. “Much of my young life was influenced by the business — from listening to business conversations around the dinner table to my sister and I spending Saturday mornings with Dad at the shop,” Thorsen said in the release. Thorsen will be tasked with overseeing daily operations and managing the significant growth she has helped generate in recent years. Since 2017, sales have nearly doubled, thanks in large part to a big push for online sales fueled by the

Gina Jacquart Thorsen will become the first female CEO of Jacquart Fabric Products, the parent company of Stormy Kromer. | STORMY KROMER

COVID-19 pandemic. Thorsen worked for nearly 12 years at Dallas-based youth empowerment nonprofit Big Thought before returning home in 2009 to the family business in Ironwood at the northwestern tip of the U.P. She oversaw sales, marketing and new product development, including the Petal Pusher Cap, which has become the company’s best-selling hat for women, and the launch of a full pet product line a few years ago.

HEALTH CARE

REAL ESTATE

Study: MI employers pay hospitals twice as much as Medicare BY DUSTIN WALSH

grantmaking during the foundation’s spend-down decade. “This transformational decision follows a detailed analysis and assessment of how our stewardship efforts can continue to have the longest and greatest impact on the grantmaking areas guided by the vision and legacy of our founders,” Erb and Hawkins said in their joint statement. “This is an incredibly exciting time to begin this new journey with our extraordinary team and the grantees we have supported over the last 14 years.

Michigan employers pay health systems twice as much for employee health care, on average, than the government does for Medicare patients. Hospital prices for private insurers in Michigan increased from 157 percent of what Medicare pays for the same hospital services in 2018 to 203 percent in 2020, according to the annual RAND 4.0 Price Transparency Study released Tuesday. The calculated costs include what private insurers, paid through employer funds, pay in combined inpatient and outpatient prices, not including fees paid to physicians. The metrics are complicated, but the RAND study is widely believed to be the most comprehensive health care cost transparency study in the nation and its researchers urge employers to negotiate with health systems to wrangle in costs. “Because rising health care costs are paid directly from worker wages and other benefits, ignoring health care prices places downward pressure on health care affordability for employees and their families and reduces employee take-home pay,” the study reads. RAND is a national nonprofit research organization aimed at helping decision-makers through research and analysis. Nationally in 2020, employers and private insurers paid 224 Jackson percent of what Medicare would have paid for the same services at the same facilities, down from 247 percent in 2018. The decline in spend is explained by a sharp rise in health care claims from states where employers see lower hospital prices, such as Hawaii, Arkansas and Washington. Bret Jackson, president of the Economic Alliance of Michigan, which represents large employers in controlling health care costs, alleges that when the first RAND study showed Michigan hospitals were below the national average in 2017, they raised prices. “When Michigan hospitals saw the bargain they were providing Michiganders, they quickly raised their prices,” Jackson said in a statement to Crain’s. “Some may say this shows the dangers of transparency and disclosing of negotiated rates, but I think it clearly demonstrates how dysfunctional and unaccountable the health care market is. Michigan families and businesses are hurting, and hospitals should not be protecting themselves from inflation by passing all costs to their customers.”

See ERB on Page 15

See STUDY on Page 16

The late Joel Landy was a pioneering real estate developer in what came to be known as Detroit’s Midtown neighborhood. | ARA HOWRANI/CAPITAL IMPACT PARTNERS

‘HOPEFULLY, WE’LL BE ABLE TO DO SOME GOOD WITH IT’ Eccentric developer’s estate selling portfolio to fund foundation BY KIRK PINHO

Joel Landy was a lot of things. Eccentric. Disheveled. A collector of collections. Unabashedly himself. Perhaps armed, on occasion. Rarely in good health. The Detroit developer and landlord who died in August 2020 at age 68 had a charitable side, as well. Landy’s estate is listing almost all of his real estate portfolio, primarily in a couple-block stretch of what once was notoriously known as the Cass Corridor, up for sale, with the

proceeds to go to the new Joel Landy Foundation. It was established last year, according to state records, although he had talked about setting it up prior to his death, the Toledo Blade posthumously reported. Joseph Kopietz, an attorney who is working on the effort apart from his job as senior counsel for Detroit-based law firm Clark Hill PLC, said that once funded, the foundation will benefit a pair of causes near and dear to Landy’s heart: Automotive education — he was also a me-

chanic — and historic preservation. “Joel was big into technical education,” Kopietz said. “Anybody that knew him knew that he was not afraid to get his hands dirty.” There is a three-member foundation board with lifetime appointments consisting of Gary Torgow, chairman of the board for Huntington National Bank; his son, Elie Torgow, who is CEO of Detroit-based real estate company Sterling Group; and Robert Baldori of Baldori Law.

“JOEL WAS BIG INTO TECHNICAL EDUCATION. ANYBODY THAT KNEW HIM KNEW THAT HE WAS NOT AFRAID TO GET HIS HANDS DIRTY.” — Joseph Kopietz, an attorney who is working on the effort

See LANDY on Page 15

NONPROFITS

Erb foundation shifting to spend-down model BY SHERRI WELCH

The Fred A. and Barbara M. Erb Family Foundation, one of the region’s largest private foundations, is shifting to a spend-down model with the intent of disbursing all funds within the next 12 years. The $350 million foundation will continue to operate under its current strategic plan for the next two years while it develops a strategic plan for the 10-year spend-down period to begin by 2025. Chairman John Erb, son of the late Erb Lumber Co. builder Fred Erb and Barbara Erb, and the foundation’s president, Neil Hawkins,

John Erb

Neil Hawkins

shared the news in an email that was set to go out to stakeholders Tuesday. For the next two years, it will be business as usual for grantees and partners, Erb and Hawkins said. The Royal Oak-based foundation

projects it will make gifts of approximately $13.5 million this year to support its focus areas: environmental initiatives tied to improving the health of the Great Lakes, sustainable business, environmental health and justice, the arts and Alzheimer’s research. As it shifts to a spend-down model, the foundation, which ranked eighth on Crain’s 2021 list of largest foundations in Southeast Michigan, will focus on its current funding areas and the founders’ legacy projects but transition to larger projects and strategic grantee program support, the leaders said. That will mean greatly increased

MAY 23, 2022 | CRAIN’S DETROIT BUSINESS | 3

REAL ESTATE INSIDER

A winding saga: How South Lyon’s largest private employer came to be owned by Ukrainian oligarchs For years, South Lyon’s largest employer was owned by two Ukrainian oligarchs accused of laundering billions stolen from the Kirk bank they owned PINHO by purchasing commercial real estate and businesses. Few people in Michigan noticed. The complicated case of Ihor Kolomoisky and Gennadiy Boholiubov, who operated a mosaic of entities with U.S.-based partners and managers under the Optima Ventures umbrella, ensnared Michigan Seamless Tube LLC, which has a factory on McMunn Street that employs hundreds. Aside from perhaps the South Lyon Community Schools district, it is the west Oakland County community’s largest employer, said Nathan Mack, the community’s economic development and DDA director. Notices of the Michigan Seamless’ June 2008 purchase are, at best, dry. Within a few years, the company became a bit splashier under parent company Optima Specialty Steel Inc., announcing a $25 million investment in new equipment in 2013. It was all a sham that could have collapsed the economy of the now war-torn country that’s battling the invading Russian army.

Michigan Seamless Tube LLC in South Lyon. | DUSTIN WALSH/CRAIN’S DETROIT BUSINESS

operated continuously for nearly a century — was controlled by billionaire oligarchs, one of which would later play a bit part in the first Donald Trump impeachment trial. Oligarchs and industry It wasn’t just Michigan Seamless Less than a decade after buying locally that fell victim to BoholiMichigan Seamless Tube — which ubov and Kolomoisky, who the through David Ascher, the compa- Washington Post reported is tied to ny’s vice president, general counsel Ukrainian President Volodymyr and secretary, declined comment Zelensky. Prior to his election, the — Optima Specialty Steel filed for now-president starred in a comedy Chapter 11 bankruptcy protection show on Kolomoisky’s television in 2017, the South Lyon Herald re- network. A civil case filed in the Delaware ported at the time. But in hindsight, obviously, even Court of Chancery says Optima from the outset, it was never going Specialty Steel in December 2011 bought Niagara LaSalle Corp. and to end well. Federal court documents say its five steel production facilities, Michigan Seamless Tube was pur- including the one in Warren, as part chased in June 2008 using $74.5 of a $236.1 million deal. The Warren facility is at 22700 Nagel St. “YOU’RE LOOKING FOR MARKETS WHERE east of Hoover YOU CAN MAKE TRANSACTIONS THAT ARE Road and LARGE AND LIQUID MARKETS WHERE YOU south of East Nine Mile CAN OFFLOAD IT QUICKLY.” Road. Another en— Will Thomas, assistant professor of business law, University of Michigan Stephen M. Ross School of Business tity, Steel Rolling Holdings million in misappropriated funds. Inc., another defendant in the DelThat includes $28 million from Pri- aware case, in May 2006 paid $20 vatBank Cyprus and $1.5 million million for the 600,000-square-foot from PrivatBank in the Ukraine, Detroit Cold Rolling Facility in Giboth of which court filings say were braltar, running the plant from 2009 owned and controlled by Kolo- to March 2015 when it was sold to Ferragon Steel Rolling, according to moisky and Boholiubov. The $29.5 million passed be- the filing. And in Cleveland, Kolomoisky tween 16 different LLCs’ bank accounts in 28 different transactions and Boholiubov spent at least $180 and then was coupled with $45 mil- million on downtown real estate, lion more that was laundered, ac- my colleagues at Crain’s Cleveland Business have reported the last few cording to the feds. And with that, Michigan Seam- years. Federal agents raided Optiless Tube — which can produce ma’s offices in August 2020 and it’s 40,000 tons of pipe and tube annu- been a steady drumbeat of bad ally, according to the feds, and has news since. 4 | CRAIN’S DETROIT BUSINESS | MAY 23, 2022

Real estate deals The U.S. Department of Justice says in varying criminal complaints and federal court filings that Kolomoisky and Boholiubov each owned about 45 percent of PrivatBank, which was founded in 1992, and made more than $5 billion in loans to themselves from the bank. Various reports about the scandal say that they have denied wrongdoing. Nevertheless, the fraud that was uncovered in 2016 was a cataclysmic shock. The DOJ says it held one-third of Ukraine’s deposit accounts and deposits totaling more than $6 billion, accounting for 25 percent of the country’s banking sector. It had to be nationalized and bailed out by the National Bank of Ukraine with $5.5 billion. Zelensky has reportedly not been in favor of returning control of PrivatBank to the oligarchs. The feds have sought forfeiture of various real estate assets the men accumulated with the ill-gotten funds, including in Cleveland, Dallas and elsewhere. Others implicated in the scheme are Mordechai Korf, based in Miami, who partially owned and operated dozens of U.S. entities for Kolomoisky and Boholiubov; and Uriel Laber, also based in Miami, who worked with Korf. The U.S. Department of Treasury, through the Financial Crimes Enforcement Network, or FinCEN for short, is attempting to get a better handle on the broader problem: The ease with which money can be laundered through real estate transactions. Global Financial Integrity, a Washington, D.C.-based NGO, found in an August 2021 report

called “Acres of Money Laundering: Why U.S. Real Estate is a Kleptocrat’s Dream” that at a minimum, more than $2.3 billion was laundered through U.S. real estate between 2015 and 2020 across 125 reported cases. The NGO says that Treasury’s use of what are known as geographic targeting orders, or GTOs, is “insufficient.” The most recent GTO — which requires American title insurance companies to report the identities of people behind shell companies buying residential real estate in cash valued at $300,000 or more — expired April 29. It covered Boston; Chicago; Dallas-Fort Worth; Honolulu; Las Vegas; Los Angeles; Miami; New York City; San Antonio; San Diego; San Francisco; and Seattle. Tom Cardamone, president and CEO of Global Financial Integrity, said in a press release last year: “It is clear that despite their best efforts, the U.S. government’s attempt to address money laundering — particularly the use of real estate — has fallen short of what is required to address this growing problem. More needs to be done, including requiring real estate agents and lawyers to report certain purchases to the Treasury Department, so that the United States rises to global best practice.” In the past six months, FinCEN held what’s known as an Advance Notice of Proposed Rulemaking period, during which it solicited comments and suggestions on ways to address what it called “systemic money laundering vulnerabilities presented by the U.S. real estate sector,” an issue which “threatens U.S. national security and the integrity of the U.S. financial system.” That period ended in February,

and a FinCEN spokesperson said in an email last week that it is “currently reviewing comments and cannot speculate on whether or any such regulations might be proposed.”

Finding a solution Unlike markets like Miami and New York, for example, using real estate to launder money has never been a foremost concern in the Detroit area, said Will Thomas, an assistant professor of business law in the University of Michigan Stephen M. Ross School of Business in Ann Arbor. That’s because people laundering money are looking for ways to launder the most in the quickest amount of time. And although Detroit has expensive homes, they are more expensive in other markets — and those expensive homes can trade hands a lot quicker. “You’re looking for markets where you can make transactions that are large and liquid markets where you can offload it quickly,” he said. And although Thomas said that “in principal it’s a good idea” to have more specific nationwide reporting regulations — not just targeting certain markets — the “devil will be in the details.” “It could be extremely costly and not have a lot of good outcome,” he said. “One of the biggest problems FinCEN is going to have is that property law is state law. The feds have a lot of say on the banking stuff and can put these requirements on insurers, but at the end of the day the feds are going to have to coordinate with 50 different secretaries of state.” Contact: kpinho@crain.com; (313) 446-0412; @kirkpinhoCDB

REAL ESTATE

Reined-in Northville Downs project trots toward plan approval Developer Hunter Pasteur Homes plans 440 units of housing on 48-acre race track site BY KIRK PINHO

The proposed development on the Northville Downs race track site has resumed working its way through the municipal approval process. Developer Hunter Pasteur Homes, based in Farmington Hills, has been meeting with the Planning Commission over the last few months on what is now a vision that would bring more than 440 units of housing across multiple types to the 48-acre Northville Downs horse racing track site. There would be 38 single-family homes, 98 townhomes, 28 carriage houses, 62 row houses (half north of Beal Street and half to the south), 172 apartments and 43 condominiums, according to Planning Commission documents from a Tuesday evening meeting. About one-third of the site’s acreage would be devoted to parks and green space, and there would also be commercial space. In addition, in the last few weeks, the 11-acre northern portion of the Northville Downs site has been sold to an affiliate of Hunter Pasteur, Perennial Northville LLC, registered to Randy Wertheimer, the company’s CEO, according to Wayne County land records. Hunter Pasteur declined com-

A rendering of the proposed development on the site of the Northville Downs horse racing track. | ELKUS MANFREDI

ment other than providing an emailed statement: “We have appreciated the opportunity to work collaboratively with the planning commission, the DDA, the various city task forces and the community to design and ultimately execute a development that properly integrates into the community fabric and rich history of Northville,” Seth Herkowitz, COO and partner of Hunter Pasteur Homes, said. Patrick Sullivan, Northville’s city manager, said the Planning Commission has decided to have meetings on individual facets of the proj-

ect due to its complexity and scale. Those issues include traffic impacts, land uses, public spaces, architecture, landscaping, infrastructure and financial impacts. “It’s a very complex project,” Sullivan said, noting that it’s not known when preliminary site plan approval would be granted. The project has been in the works for more than four years, although there was a pause in discussions with the city that only resumed last summer. “When they initially proposed the project, there was a desire the com-

munity expressed to see more green space, open space, less density and less impact on traffic and the developer responded to those concerns,” Sullivan said. Others working on the project are Fort Washington, Pa.-based Toll Bros. and Southfield-based Forbes Co. Boston-based Elkus Manfredi Architects Ltd., Detroit-based Neumann/Smith Architecture, Plymouth-based Grissim Metz Andriese Associates, Northville-based M Architects and Presley Architecture, which has an office in Northville, are also contributing to the effort. When the plan was first unveiled in April 2018, the conceptual vision called for between 500 and 600 apartments and for-sale townhomes, plus commercial uses; it was later revealed that the anticipated development cost was $200 million, although construction costs have increased the last few years. The current development cost is not known. The Northville Record reported in February that there have been public concerns about the project’s density and its impact on traffic and community character, all of which are common when new housing is proposed. It’s the most dense project the city has taken up in years, Sullivan said. “Certainly nothing of this magni-

tude of density because it’s this many units on 48 acres,” he said. “It’s more dense than anything we’ve seen in decades in our little community.” Northville has about 6,000 residents. An email was sent to Mike Carlo, a member of the Carlo family which owns some of the Northville Downs acreage, last week. An investment group called Northville Driving Club Corp. owned the rest, but sold it to Northville Downs for an estimated $500,000, according to land records. Carlo told Michigan Farm News, a publication of the Michigan Farm Bureau, in January that he and his brothers are looking for Detroit-area land to build a new race track if Northville Downs isn’t in operation past 2024. It has 62 race dates on the books for this year, an increase from the roughly 56 held last year, the publication reported. Hunter Pasteur has been active the last several years, working on projects in Detroit — in the Brush Park neighborhood with Dan Gilbert and others, and in the Corktown neighborhood with Oxford Capital Group LLC — plus in Birmingham’s Triangle District, among others. Contact: kpinho@crain.com; (313) 446-0412; @kirkpinhoCDB

SPONSORED CONTENT

THE CRITICAL ROLE OF TRUST IN DIVERSITY, EQUITY AND INCLUSION EFFORTS:

These times play a major role in the Detroit Regional Chamber’s 2022 Mackinac Policy Conference, taking place May 31 through June 3. The conference, titled The Business Community’s Changing Civic Role in Polarizing Times, will highlight four areas in which Michigan’s business community can set an example: Advancing diversity as a strength; utilizing civility and facts in public discourse; building a culture of empathy; and advocating for the fundamental tenets of American democracy.

rust — in government, in business, and perhaps even in each other — is at a premium these days. Trust, the marker of a strong relationship, is often difficult to earn and even more difficult to maintain.

By David Parent, Michigan Managing Principal, Deloitte LLP

Building trust in diversity, equity and inclusion (DEI) initiatives is the central theme and title of a recent Deloitte report on DEI efforts in the business community. The survey, which includes more than 1,500 racially and ethnically diverse employees, indicates that 80% of those polled trust their organizations to fulfill stated DEI goals, 84% believe leaders are putting their words into actions and 80% believe that leaders’ DEI initiatives come from the right place. That’s good news. The not-great news is that 40% of respondents would consider leaving their workplaces if they can’t trust leaders to fulfill DEI initiatives, and 56% would not recommend their organization to friends or family as a place to work. Lack of trust around DEI can create a ripple effect, spreading

to relationships with customers and suppliers as well as employees, the report indicates. One of Detroit’s biggest strengths is its diversity. The metro area rates a diversity index score of .43 — calculated by the likelihood of any two randomlyselected residents being racially or ethnically different from each other, according to a 2020 report by U.S. News. Detroit, and by extension, Michigan businesses, should consider doing what they can to engender trust around DEI issues.

Trust is the tie that binds those four areas. First, businesses should cultivate the trust, recognizing that diversity can strengthen rather than divide us. Deloitte’s Building Trust report, for instance, indicates that organizations that adhere to ethical principles, including DEI, boast a lower investment risk than those that do not. Trust also underpins the use of civility and facts in public discourse. Transparency, honesty and sincerity, according to Building Trust, often play

major roles in the process of gaining employee trust around DEI goals, even when honesty and transparency involve admitting mistakes or missteps. As for a culture of empathy? Building Trust suggests companies can demonstrate empathy to “create a psychologically safe environment in which people can speak freely about their experiences and thoughts.” To do so, business leaders should ask themselves, how would I feel if I couldn’t speak freely? That’s empathy. Employees need to be able to trust that that empathy is real, and know they can speak freely without fear of reprisal. Lastly, there’s the theme of advocating for the fundamental tenets of American democracy. Equality is one of those fundamental tenets. It is what DEI is about — from equal economic opportunity to equal health and environmental equity. DEI should be a fundamental tenet of the business community in Detroit and all of Michigan. That, I trust, is something we all agree on.

This publication contains general information only and Deloitte is not, by means of this publication, rendering accounting, business, financial, investment, legal, tax, or other professional advice or services. This publication is not a substitute for such professional advice or services, nor should it be used as a basis for any decision or action that may affect your business. Before making any decision or taking any action that may affect your business, you should consult a qualified professional advisor. Deloitte shall not be responsible for any loss sustained by any person who relies on this publication. ABOUT DELOITTE: Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee (“DTTL”), its network of member firms, and their related entities. DTTL and each of its member firms are legally separate and independent entities. DTTL (also referred to as “Deloitte Global”) does not provide services to clients. In the United States, Deloitte refers to one or more of the U.S. member firms of DTTL, their related entities that operate using the “Deloitte” name in the United States and their respective affiliates. Certain services may not be available to attest clients under the rules and regulations of public accounting. Please see www.deloitte.com/about to learn more about our global network of member firms. Copyright © 2022 Deloitte Development LLC. All rights reserved. MAY 23, 2022 | CRAIN’S DETROIT BUSINESS | 5

COMMENTARY

A solution to help turn around Michigan’s population drain

‘Stalled’ education numbers renew calls for reform

nother day, another dismal set of numbers on the state’s education crisis. This time, it’s the nonprofit Education Trust-Midwest’s 2022 annual State of Michigan Education report, aptly titled “Still Stalled.” And it’s bad news not just for children mired in a stagnant system, but for business leaders hoping to market Michigan as a state worthy of new high-tech investment. The report, released last week, cements Michigan toward the bottom nationally when it comes to fourth-grade reading — a key indicator of a child’s future academic success — as well as eighth-grade math. The state is projected to be 39th in the nation by 2030 for fourth-grade reading and 28th for eighth-grade math, according to the report. The outlook is even more bleak for Black and Latino students; English learners; students from low-income families; and students living in isolated, rural areas. The report showed nearly a quarter of Michigan students, and nearly 44 percent of Black students, were required to take at least one remedial course in college. The state also has the sixth highest out-of-school suspension rate in the nation for Black students, it says. The report lays bare an “unprecedented moment,” says Mike Jandernoa, former CEO at Perrigo and 42 IT’S UNCLEAR IF North Partners who is seeking to rally MichiANOTHER gan business leaders DEPRESSING SET to push for bipartisan funding reOF NUMBERS IS education form. “We’ve seen an eroENOUGH TO sion of talent that’s SPUR ACTION IN coming out of the K-12 system, especialA DOGGEDLY ly at this time when PARTISAN there’s a gap between the talent out there LEGISLATURE. and the jobs we have open,” Jandernoa said on a call with Crain’s. “The gap is larger and looks like it’s going to get worse.” Even the best-performing schools in Michigan are not competitive with other states, he pointed out. “Some business leaders are afraid of saying too much about it because they’re afraid they aren’t going to be able to recruit people

Kelley

ROOT

Executive Editor to move to Michigan … but we’ve got to make sure the population is educated and aware (of ) the need for dramatic change.” That change must include a funding model that takes into account the greater challenges faced by underserved and underrepresented students, according to the Michigan Partnership for Equity and Opportunity coalition. The coalition is joining the Education Trust-Midwest in calling for more transparency in spending and student achievement data to better connect how education dollars affect learning. Coalition member Deidre Lambert-Bounds, a business owner who grew up in Detroit in a single-parent household, said she understands the needs of at-risk students better than most. “When I graduated high school, I was not prepared for college. I was not prepared for work, or a career,” she said. “I had to figure out how I was going to get past that. It took a lot of work, effort, remedial learning. … I’m happy to be part of the coalition because it allows me to give some insight and hope in how we can help students who grew up like me.” It’s unclear if another depressing set of numbers is enough to spur action in a doggedly partisan Legislature that’s famously unable to agree whether the sky is blue. For his part, Jandernoa said he sees hope in small actions, such as the allocation of $75 million to improve information technology needed to track information at the student level. “Just putting money in the budget doesn’t mean it gets into the classroom,” he points out. “There is momentum,” he added. “I see it in the Legislature.” Let’s hope he’s right. Small actions might be the best we can do, given that major changes in education funding would require a Constitutional amendment. But anything is better than going backward.

population decrease spells bad news for states, counties and cities. Fewer people — of course — means fewer workers and consumers to stimulate economic activity and generate more tax Alan C. Young is revenue. The latest data from chairman & the U.S. Census Bureau CEO of the shows Michigan’s popuYoung Conway Group. lation decreasing as residents grow older and domestic migration slows. Prior to 2020, Michigan had been steadily gaining population each year. That trend starts to reverse as of July 2021. Locally, Macomb, Oakland and Wayne counties each lost 3,557; 2,391 and 15,409 residents respectively last year. It is difficult to attract workers and their families to areas with shrinking or slow-growing populaces. To combat sluggish population growth, some states have introduced policies to attract a young workforce. Maine, for example, offers a tax incentive for college graduates to relocate there; and West Virginia offers a financial incentive to attract new remote workers. Along these lines, one initiative that would benefit Michigan is to attract and incentivize minority business enterprises. MBEs are, and have been, driving a disproportionate amount of economic growth in the U.S. For example, from 2014-2018, MBEs created 15 percent of new jobs in the nation, while collecting only seven percent of the revenue growth during the same period. MBEs continue to lag in receiving equitable economic benefits of their contribution. Incentives that speak to changing that dynamic would attract MBEs and boost population growth and tax revenues. Economic downturns have historically hit MBEs harder than non-minority-owned

Write us: Crain’s welcomes responses from readers. Letters should be as brief as possible and may be edited for length or clarity. Send letters to Crain’s Detroit Business, 1155 Gratiot Ave, Detroit, MI 48207, or email crainsdetroit@crain.com. Please include your complete name, city from which you are writing and a phone number for fact-checking purposes. 6 | CRAIN’S DETROIT BUSINESS | MAY 23, 2022

businesses. During the COVID pandemic, Black-owned businesses experienced a 40 percent decline in revenues, and Hispanic-owned businesses a 30 percent drop, compared with white-owned businesses, which declined by 17 percent. Lack of access to equal capital has been a long-standing problem for MBEs: On average, 69 percent of MBE loan requests are granted, compared with 85 percent of whiteowned companies’ loan applications. Venture capital is also scarce for MBEs: in 2020, Black and Hispanic businesses received 2.6 percent of all venture capital funding. A recent McKinsey & Co. study found that fixing the revenue disparity between Black and white-owned businesses would add over $290 billion to overall wealth. We can learn from history. The states with long-term population declines all fell near the bottom of eco- IT IS DIFFICULT nomic growth during the 12-year recovery TO ATTRACT from the Great Reces- WORKERS AND sion. While a smaller population can lead THEIR FAMILIES to a reduction in TO AREAS WITH some types of spending, it also means SHRINKING OR there are fewer resi- SLOW-GROWING dents to cover costs of long-standing com- POPULACES. mitments such as debt and state employee retirement benefits. It’s a simple fact: funded companies achieve significantly more revenue and employment growth than companies that cannot access or raise their own funding. By 2045, minorities are estimated to make up more than half of the U.S. population, so real access to capital for MBEs to compete in order to provide goods is essential. Creating and supporting viable pools of Michigan MBEs by removing barriers to capital access will only fuel Michigan’s economy, thereby offsetting the population loss.

GETTY IMAGES/ISTOCKPHOTO

BY ALAN C. YOUNG

Sound off: Crain’s considers longer opinion pieces from guest writers on issues of interest to business readers. Email ideas to Managing Editor Michael Lee at malee@crain.com.

OTHER VOICES

Why the governor failed to improve road conditions Did Gov. Gretchen Whitmer fulfill her campaign pledge to fix the roads? Clearly not. Her insistence that roads could only be improved with tax hikes derailed James M. the progress that Hohman is lawmakers made. director of fiscal It also kept the policy for the state from what Mackinac Center for Public ought to be its goal: to fix roads Policy. faster than they fall apart. Lawmakers had already done a lot to stave off road quality declines when the governor took office. The state was spending just $2.0 billion on roads in 2011, but by the time the governor’s term began in 2019, this had increased to $3.6 billion, a 62 percent gain after inflation. Part of this increase — 38 percent of the extra funding — was due to fuel and vehicle registration tax hikes in 2015. The rest came from lawmakers devoting a portion of the state’s growing tax revenues to roads. Administrators measure the state of roads and project that into the future, and they warned back in 2011 that roads were going to deteriorate quickly without more funding. Administrators expected roads quality to decline from around 35 percent of roads being in poor condition in 2011 to more than 50 percent in 2019. Lawmakers spent more on roads, and the state avoided most of the projected decline in road quality. Around 40 percent of the state’s roads remain in poor condition, and when the governor took office, they expected that roads would remain around those levels for the foreseeable future. It should have been easy for the road-funding governor to fulfill her pledge as she began her term. All she needed to do was work with the Republican legislators to find a little bit more money for road repair. It wouldn’t take much more to fix roads faster than they fall apart, which sets the state up for long-term improvement in road quality. This didn’t happen because the governor had other priorities than road funding. She wanted a 45 cent per gallon fuel tax increase to generate $2.5 billion in annual revenue. But only $1.9 billion of that would be spent on road construction. The rest was intended for other parts of the governor’s agenda. Whitmer actively opposed lawmakers spending more money on roads without raising taxes, and claimed that anything less than her $2.5 billion tax hike for $1.9 billion in road repairs was “phony.” The governor did not persuade legislators to pass tax hikes. Instead, they found an extra $375 million for roads without having to raise taxes. And despite the fact that this 10 percent increase in road funding would likely have gotten the state to the goal, the governor vetoed the extra funds. She mocked legislators for proposing “shell games” and “phony fixes” — apparently only tax hikes counted to her. Except she could not get legislators to support her tax hikes, or any tax hike. They were unnecessary be-

cause the state could get to the goal purposes for the current year, up $150 without unpopular tax hikes. (A tax million from when Whitmer took ofhike that went on the ballot in 2015 fice. But that’s not enough to keep up was rejected by 80 percent of voters, with inflation. There has been extra federal spending after all.) as well, but exShe should IT SHOULD HAVE BEEN have comproplicitly not the kind of long-term mised on extra EASY FOR THE GOVERNOR spending necesmoney for road funding without a TO FULFILL HER CAMPAIGN sary to get to tax hike, claimed PLEDGE. long-term improvements in victory and road quality. moved on. There has been growth in the rest of The governor has acquiesced somewhat since then. There has been the state budget as economic growth a little more allocated to roads. There generated more in tax revenue. State is $3.79 billion in the state spending spending has increased by $6.3 billion on roads and other transportation over the governor’s term. In other

words, the state’s collecting $6.3 billion more, but only 2 percent of the increase is going to roads. Everything else was more of a priority than roads to the road-funding governor. This may change in the governor’s last budget of this term. She recommends spending $481 million more for road repairs without raising taxes. Sustained additional spending at those rates might get the state to its goal. The state and its local governments own the roads and should keep them in good working order. It should have been easy for the governor to fulfill her campaign pledge. But everything other than the roads was a higher priority.

CHAD LIVENGOOD/CRAIN’S DETROIT BUSINESS

BY JAMES M. HOHMAN

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PICKING UP THE PIECES What happens to pieces of a home when it’s torn down?

RESIDENTIAL REAL ESTATE

PAGE 9

‘GREATER EXPECTATIONS’

DESROSIERS ARCHITECTS

BEFORE

Teardowns make way for bigger, more modern metro Detroit homes

8 | CRAIN’S DETROIT BUSINESS | MAY 23, 2022

Th ther St olde thes to tu C Chr at K min sells obso room gan 1900 mod reno “doe have W city, tanc see now sent pen und con D Hom selle thei he’s “W said mor They Ly $750 dow split ofte said have In er o he’s buy ress wor

BY A

BY ARIELLE KASS While homes continue to be demol-

ished to eliminate blight in Detroit, in other parts of the metro area, they’re being torn down for an entirely different reason — to build new homes. Cities that have older housing stock and walkable neighborhoods have for the past several years seen builders and buyers looking for property not to live in, but to build on — despite the fact that there are already houses there. It’s particularly prevalent in higher-priced cities that have small houses on large lots, with lots of room to create bigger structures with more amenities. Nearly 500 homes in Birmingham have been granted demolition permits since 2017, with almost 400 new structures going up in their place. As people want to live within walking distance of Birmingham’s desirable downtown, but in more modern houses than they can buy, both residents and builders are continuing to purchase homes with plans to demolish them and create something new.

From

Before-and-after photos of a home in Birmingham, at 1598 Redding Road, near downtown. The existing two-story home (inset) was torn down and replaced by a larger and more modern estate. | DESROSIERS ARCHITECTS

Much of the original housing stock in the city is from the 1920s to the 1960s, said Dan Gutfreund, a senior global real estate adviser with Sotheby’s International Realty. Modern buyers have “greater expectations” for where they live, wanting higher ceilings and more open floor plans and systems, including home automation, that simply weren’t available when the houses were first built. While plenty of people are renovating older houses to fit their current needs, many are simply starting over on land a house used to be on. “They want to be in a comfortable home, up to today’s standards,” said Gutfreund, who said he had six clients willing to reha-

“TEARDOWNS HAVE ALWAYS BEEN A HOT COMMODITY.” — Paul Mooney, owner, PRM Custom Builders

bilitate or tear down houses. “In Birmingham, a lot of these neighborhoods are completely converted.” It’s not happening only in Birmingham, though. In Plymouth, for example, 81 houses have been demolished since 2017, with 76 new ones built in their place. Gutfreund said Troy, Rochester and West Bloomfield are seeing similar activity. But Birmingham seems to be the epicenter.

An end to sentimentality “Teardowns have always been a hot commodity,” said Paul Mooney, the owner of PRM Custom Builders. “The demand’s going to stay pretty strong.” Mooney said it’s increasingly difficult to find people who are willing to sell because with current market values, longtime owners need to find a new place to live — and in addition to higher costs, their taxes would go up considerably in a new home. Indeed, the number of Birmingham demolitions has been falling in recent years, from 120 in 2018 to 59 in 2021. See TEARDOWNS on Page 9

W hom he o terio “I hom hou er o set f B plen hou fixtu for H said real tern “Th and A adv A Mag Esta floo hou be s gara posa wire “I on t at a

FOCUS | RESIDENTIAL REAL ESTATE

a l g

y e t s — , e t n

DESROSIERS ARCHITECTS

of a n?

TEARDOWNS

AFTER

From Page 8

Through the beginning of May, there were 35. Still, he said, there are “plenty of older homes in Birmingham and these hot markets” that will continue to turn over. Christina Gennari, who runs the Christina Gennari real estate group at Keller Williams Domain in Birmingham, said a lot of the homes she sells to be torn down are functionally obsolete. They have one or two bedrooms over a crawlspace or a Michigan basement, were built in the early 1900s and aren’t well laid out for modern needs. While many could be renovated, she said for the cost, it “doesn’t make sense when you could have something brand new.” When the trend first started in the city, Gennari said, there was resistance from sellers who didn’t want to see their family home destroyed. But now, she said, sellers often have less sentimentality. They’ve seen it happen elsewhere on their street. They understand the neighborhood will continue to change. Dan Lynch, with Lynch Custom Homes, said he didn’t used to tell sellers that he planned to demolish their house if they sold to him. But he’s since changed tack. “We’re straightforward with it,” he said. “I thought there was going to be more emotional attachment to houses. They’re not sensitive to it anymore.” Lynch said he’s paid as much as $750,000 for a house he planned to tear down; in that instance, he was able to split the lot and build two homes. He often buys to build spec homes, but he said most don’t sit for long before they have an interested buyer. Indeed, David Schmerin, the owner of Bingham Development, said he’s often contacted by prospective buyers while the build is still in progress. He has three properties in the works in Birmingham right now, and

BEFORE

The before-and-after of a home in Bloomfield Hills on Long Lake Road, off Telegraph Road and across from the Bloomfield Hills High School, which was torn down (right) and now a larger and fancier home has been built on the site (above). | DESROSIERS ARCHITECTS

said it’s “more than normal” that he’ll demolish the existing home, start to build, and have a buyer before he’s gotten very far. Schmerin said about a third of the work he does involves teardowns.

Out with the old While there’s a certain amount of risk in tearing down a house to build

a new one on spec, Schmerin said the high demand in Birmingham mitigates a lot of it. When he started, Schmerin said, he was paying $25,000 to $40,000 for houses he’d tear down. Now, prices are between $375,000 and $600,000 and the new construction costs can be as high as $1.5 million. “There’s high demand for new construction in an area that’s fully

built out,” he said. “Right now, it’s probably as hot as it’s ever been.” Lou DesRosiers, the president of DesRosiers Architects, said lakefront properties are also in high demand. Coming back from World War II, he said, people just wanted a quiet home to live in and built modestly. Now, those lakefront homes are “a little bit humble” for current styles. His own work, he said, is less utilitarian.

“They’re opulent homes satisfying the requirements of how people live nowadays,” he said of his designs, which often include indoor-outdoor pools, gymnasiums and rooftop decks, on the sites of the old houses. “People’s lifestyles have changed, they want more; they always want more.” See TEARDOWNS on Page 10

What happens to the pieces of a home when it’s torn down? BY ARIELLE KASS

When David Schmerin buys a home in Birmingham to tear down, he often doesn’t even look at the interior before making an offer. “It’s basically a lot to construct a home on; there just happens to be a house on it,” said Schmerin, the owner of Bingham Development. “I never set foot inside of the home.” But that doesn’t mean there isn’t plenty that can be salvaged before a house is bulldozed. Many of a home’s fixtures end up donated to Habitat for Humanity before it’s demolished, said Dan Gutfreund, a senior global real estate adviser with Sotheby’s International Realty. “They reclaim doors and hinges and cabinets,” he said. And donations can generate tax advantages, too. Alison Robb, the owner of Alison’s Magnificent Obsession Moving and Estate Sales, said it’s hard to sell the floors while someone is still in the house — but the floors can definitely be sold. She’s sold sconces, mirrors, garage door openers, a garbage disposal, hot water heaters and copper wires. “I sold everything except the paint on the walls,” she said. “They will look at anything that has a monetary val-

Latoshia Cobb and Rick Marshall of Detroit talk with estate sale manager Alison Robb during a pre-teardown estate sale of the Irving Tobocman-designed home at 2810 W. Long Lake Road in West Bloomfield Township in March 2021. | NIC ANTAYA FOR CRAIN’S DETROIT BUSINESS

ue, anything. Everything has a monetary value.” When she first got into the business, Robb said she was surprised to see people buying wall plates and floor vent covers, but now, nothing surprises her. One woman bought two-thirds of a kitchen, she said, pulling out the granite countertops and moving them to her home.

At a West Bloomfield Township sale last year where the home was to be demolished, Robb said she sold the toilets, the shower heads and the faucets. Pachysandra, a plant, went for $5 a bag, while windows that normally cost $1,000 were selling for $50 apiece. “There’s a huge economic advantage,” Robb said of shoppers who fre-

quent sales from teardowns. “People who are creative and know how to save a buck save themselves thousands of dollars.” The buyers are often landlords, she said, or others who want high-quality older doors or other pieces. Tract houses, she said, have less to offer. Ryan Cunningham, of Detroit Urban Artifacts, said he’ll often scavenge items from homes that have already been destroyed, because people assumed it didn’t have value. Limestone pieces, dense wood, doors: there’s money to be made in all of it, he said, especially with lumber prices as high as they have been. “I try to salvage what’s there among the rubble,” he said. “There’s no shame in my game. ... In the city of Detroit, there are a lot of abandoned buildings being demolished at an escalated rate. It seems like the vast majority of materials are being wasted.” People also bring Cunningham knobs, hinges and other materials they don’t want to throw away. He said as young people try to save money, and focus on the environmental impact of destruction, he expects more people to become interested in the pieces of homes they can save. “From an environmental standpoint, it’s good for everyone,” said

Lisa Lamont, the owner of Moxie Estate Sales in Traverse City. “Historic cottages are being torn down left and right and there’s Dumpster after Dumpster filled up with good stuff.” Auctioneer Lyn Liechty said it has been a little while since he did a teardown, but one of his first was a Victorian house where five fireplaces sold for between $2,000 and $4,000 apiece. “If a person has the ability to rip it out, you can buy it,” he said. He recalled someone who bought the roof of a house — cutting off the top and driving away with it on a flatbed trailer. At another sale, someone wanted to buy a staircase — but had to wait until the people buying things at the top of them had collected their items. Robb said buyers often scour everywhere, and come up with items she never would have thought to sell — like rocks that lined a driveway, which she let go for $5 a wheelbarrow. For every sale, she said, there’s a sense that there are new surprises to be found. “Every house is different,” she said. “Every house, you have a little bit of a sense of Christmas.” Contact: arielle.kass@crain.com; (313) 446-6774; @ArielleKassCDB MAY 23, 2022 | CRAIN’S DETROIT BUSINESS | 9

FOCUS | RESIDENTIAL REAL ESTATE

Incomes in metro Detroit rise, pushing up affordability measure for housing

AFTER

BY ARIELLE KASS

BEFORE An already massive estate in Lake Angelus (right) was torn down to create a custom mansion with a pool (above). “They’re opulent homes satisfying the requirements of how people live nowadays,” Lou DesRosiers said of his designs. | DESROSIERS ARCHITECTS

TEARDOWNS

From Page 9

DesRosiers said “everybody’s tearing everything down,” and he expects it won’t be long before, in the most desirable neighborhoods, all the homes have been renovated or replaced.

No sign of stopping Historically, Gutfreund said, Birmingham has always been among the priciest places in the metro area. Now that property there is a rarity, prices are continuing to rise — even for dirt.

“A lot of builders choose to knock down a house because the profitability increases when you build a house from scratch,” he said. “This is not a bubble; this is strictly a supply and demand issue.” Kathy Broock, a Realtor with Max Broock Realtors who said she sold a Birmingham teardown for $1.1 million, said the eye-popping prices mean the area is finally catching up to exclusive areas elsewhere in the country — for years, she said, Birmingham has been a value compared to comparable cities. She and others said the activity will continue to expand into other nearby cities, as well as areas that

have walkable downtowns and other amenities, but lack large, modern residences. “When you have wide lots and deep lots, people will pay a premium,” she said. She hopes not every old house is demolished, though. “There’s some beautiful architecture that adds to the fabric of a community,” Broock said. Speaking of one listing, she said, “There’s a 1920s Arts and Crafts home — someone could tear it down, but it’d be sad if they did.” Contact: arielle.kass@crain.com; (313) 446-6774; @ArielleKassCDB

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people who are considered the working poor, Johanon said, and provides rental units at 40 percent to 60 percent of the area median income. She said as those numbers rise, more families who haven’t seen substantial wage increases will fall on the lower end of the spectrum. “That was a huge jump; it startled us all,” she said. “We’ve never seen AMIs increase 12 percent.” Johanon said she expects to see landlords raise rents, especially those who have not been able to recover all of the money they may have lost during the pandemic. Johanon said the Central Detroit Christian CDC lost $200,000 in revenue while people struggled to pay rent. It later recovered about $130,000 of that through a state rent relief program, but that still leaves the organization down $70,000. The effect, she said, is that people will have to spend more than a third of their income to stay housed. “There comes a point when something doesn’t get paid,” she said. “How long will that take until something spins out of control?” Linda Smith, the executive director of U-SNAP-BAC, said as inflation continues, there are more demands on people’s dollars. While she said more people may now qualify for help because they fall within the necessary figures, more people are likely struggling because their wages aren’t keeping up with the increases. Schneider, with the city, said her department is talking to property owners to try to keep rents low — or to at least delay any increases. Bob Beale, the president of Fenton-based Premier Property Management, who focuses on properties for residents at 60 percent or less AMI, said he’s planning to raise rents by no more than $50 a month in most cases because he knows tenants can’t afford to pay much more. He doesn’t want to see turnover, he said. “I was surprised by the increase. It’s much more than we’re used to seeing,” he said. “We had to have some discus-

A national measure used to determine housing affordability in the region rose by 12 percent this year, a benefit to some landlords who are seeking to charge higher rents, but detrimental to low-income residents who may have to spend more of their income on shelter. The measure, the area median income, is generally good economic news: It means wages are rising. But since the figure is also used to determine eligibility for certain housing programs and federally qualified “affordable housing,” higher numbers in areas where wage increases aren’t keeping up can make it more difficult for people to afford rent or access housing. The annual increases are usually minimal, said Julie Schneider, the director of Detroit’s Housing and Revitalization Department, so the 12 percent jump was higher than expected — and has implications for residents who are already struggling to pay rent. In Wayne County, figures released last month show the AMI for a single person was $62,700; for a family of four it was $89,500. That’s up from $56,000 for an individual and $80,000 for a four-person household. Affordable housing units often use a percentage of the area median income to determine what people are charged. For example, units that are built for residents who make 60 percent of the area median income — $37,620 for an individual or $53,700 for a family of four — would pay $1,209 for a two-bedroom apartment under the new figures, up from $1,080 last year. At 80 percent of the area median income — $50,160 for an individual or $71,600 for a family of four — a two-bedroom apartment would go for $1,612, up from $1,440. Schneider said the rising figures reinforce the need for more deeply affordable housing in Detroit, where census data shows the median income is $32,498 and a third of residents live in poverty. “We know we have a substan- “I WAS SURPRISED BY THE INCREASE. IT’S tial need,” Schneider said. MUCH MORE THAN WE’RE USED TO SEEING.” “I don’t think — Bob Beale, president, Premier Property Management the importance of housing stability can be overstated.” sions internally. What are we going to The figures are calculated by the U.S. do with this?” Department of Housing and Urban DeBeale said there are some positives velopment, and are tailored to metro- to the increase: Some residents who politan statistical areas. The De- were just outside the salary range to troit-Warren-Dearborn MSA has more qualify for the affordable units are now than 4.3 million people, many of whom able to do so, and the higher numbers live in wealthier areas than the city of will make projects that are coming onDetroit and pull up the median income line and under construction more susfor the region. tainable. But he said existing residents That can present challenges for can’t handle increases to the maximum low-income Detroit residents, said Lisa allowed. He said instead, he looks at the Johanon, the executive director of the AMI numbers as a cap, as the highest Central Detroit Christian Community he’s able to charge — not as a goal. Development Corporation. She said it’s That’s also the case for Roderick Har“incredibly unjust” that the city is damon, the CEO of URGE Developlumped in with other parts of the metro ment Group. He said he looks not just at area because there isn’t enough hous- the federal figures, but what rents difing geared toward the actual needs of ferent neighborhoods in the city can residents. bear. “Someone who last year was 60 per“Just because the AMI moves doesn’t cent is now 50 percent,” Johanon said of mean I change my price point,” he said. the rising AMI numbers. “Folks who are “My goal is not to bleed every dollar out still trying to move up that ladder, their of rent.” pathway out of poverty is stymied again.” Contact: arielle.kass@crain.com; Her organization mostly works with (313) 446-6774; @ArielleKassCDB

CRAIN'S LIST | RESIDENTIAL BROKERS Ranked by 2021 gross sales COMPANY ADDRESS PHONE; WEBSITE

TOP EXECUTIVE(S)

GROSS SALES ($000,000) 2021

GROSS SALES ($000,000) 2020

NO. OF RESIDENTIAL TRANSACTIONS CLOSED IN 2021

NO. OF LOCAL OFFICES/ NO. LICENSED BROKERS AND REGISTERED SALES REPRESENTATIVES

AVERAGE SALES PER OFFICE ($000,000)

REAL ESTATE ONE INC.

Stuart Elsea president, financial services Dan Elsea president, brokerage services

$6,806.1

$5,749.5

21,832

45 1,885

$151.2

COLDWELL BANKER WEIR MANUEL/HUBBELL BRIARWOOD

John North CEO Tina Eick CFO

$2,073.7

$1,865.5

6,854

9 568

$230.4

HOWARD HANNA REAL ESTATE SERVICES

Helen Hanna Casey CEO Howard Hanna IV president Howard Hanna III chairman

$1,102.2

$906.6

3,315

9 260

$122.5

BERKSHIRE HATHAWAY HOMESERVICES KEE REALTY 1

John Meesseman president

$899.5

$798.4

3,924

10 419

$90.0

KELLER WILLIAMS REALTY LAKESIDE

David Klaft broker/owner

$884.5

$719.8

3,314

3 374

$294.8

KELLER WILLIAMS ADVANTAGE (KW ADVANTAGE)

Robert Chubb operating principal

$859.2

$628.2

3,002

2 401

$429.6

SIGNATURE SOTHEBY'S INTERNATIONAL REALTY

Douglas Hardy chairman

$786.6

$715.1

1,848

3 143

$262.2

RE/MAX PLATINUM

Joseph DeKroub Jr. CEO

$765.7

$706.0

2,561

6 216

$127.6

RE/MAX CLASSIC

Carlina Boji broker/owner

$742.7

$680.9

2,637

6 155

$123.8

KELLER WILLIAMS PROFESSIONALS PLYMOUTH & BRIGHTON

Jeff Glover operating partner

$735.3

$526.0

2,813

3 437

$245.1

RE/MAX FIRST

Rob Shaffer broker/owner

$680.7

$651.9

3,068

7 171

$97.2

CENTURY 21 CURRAN & OBERSKI

Adam Oberski CEO

$675.1

$486.4

2,787

4 252

$168.8

THE AGENCY HALL & HUNTER REALTORS 2

Brad Wolf owner and CEO

$627.5

$487.9

1,188

1 101

$627.5

REAL ESTATE AFFILIATES KELLER WILLIAMS WEST BLOOMFIELD & COMMERCE

David Botsford chairman

$607.7

$499.8

2,091

3 390

$202.6

CENTURY 21 TOWN & COUNTRY

Chris Hendrix managing broker

$379.0

$263.4

1,384

6 238

$63.2

RE/MAX TEAM 2000

Eddie Mallad broker and owner

$313.3

$209.1

1,290

1 13

$313.3

PREFERRED REALTORS LTD. 4

Jim Stevens president and broker

$309.6

$291.5

958

1 110

$309.6

REMERICA UNITED REALTY

Gary Reggish broker and owner

$248.7

$266.5

914

2 98

$124.3

KELLER WILLIAMS GREAT LAKES/GROSSE POINTE

Jeff Glover operating partner

$200.7

$188.2

1,432

3 144

$66.9

REMERICA HOMETOWN ONE

John McArdle broker and CEO

$192.0

$176.5

712

1 52

$192.0

RE/MAX METROPOLITAN

Chuck Cacchione Robert Scalici broker and owners

$122.0

$100.4

481

1 29

$122.0

RE/MAX NEW TREND

Yoshiko Fujimori broker and owner

$100.1

$109.1

427

1 21

$100.1

RE/MAX MASTERS

Mark Lizyness Doris LaBeau co-brokers/owners

$54.7

$43.8

254

1 14

$54.7

25800 Northwestern Highway, Suite 100, Southfield 48075 248-208-2900; realestateone.com

32100 Telegraph Road, Suite 240, Bingham Farms 48025 248-644-6300; 32100 Telegraph Road

1884 W. Stadium Blvd., Ann Arbor 48103 734-665-9800; howardhanna.com

15501 Metropolitan Parkway, Suite 105, Clinton Township 48036 810-602-7823; reallivingkeerealty.com

45609 Village Blvd., Shelby Township 48315 586-532-0500; kellerwilliamslakeside.com

39500 Orchard Hill Place, Suite 100, Novi 48375 248-380-8800; kwnorthville.com

415 S. Old Woodward Ave., Birmingham 48009 248-644-7000; signaturesothebys.com

6870 Grand River Ave., Brighton 48114 810-227-4600; ONLY-REMAX.com

29630 Orchard Lake Road, Farmington Hills 48334 248-737-6800; detroitmetrorealestate.com

789 W. Ann Arbor Trail, Plymouth 48170 734-459-4700; LiveUnreal.com

36594 Moravian Drive, Clinton Township 48035 586-792-8000; soldbyfirst.com

24711 Michigan Ave., Dearborn 48124 313-274-1700; c21curranoberski.com

442 S. Old Woodward Ave., Birmingham 48009 248-644-3500; TheAgencyRE.com/HallandHunter

2730 Union Lake Road, Commerce 48382 248-626-2100; kellerwilliamswb.com

48680 Van Dyke Ave., Shelby Township 48317 586-731-8180; century21towncountry.com

23676 Park St., Dearborn 48124 313-561-0900; team2000.remax-detroit.com

44644 Ann Arbor Road, Suite A, Plymouth 48170 734-459-6000; cbpreferred.com

47720 Grand River Ave., Novi 48374 248-344-1800; RemericaUnited.com

19853 Mack Ave., Grosse Pointe Woods 48236 313-886-7239; LiveUnreal.com

44785 Five Mile Road, Plymouth 48170 734-420-3400; hometownone.com

45871 Hayes Road, Shelby Township 48315 586-997-9900; metropolitan.remax-detroit.com

38275 W. 12 Mile Road, Suite 101, Farmington Hills 48331 248-553-5050; newtrend.remax-detroit.com

28628 Telegraph Road, Flat Rock 48134 734-783-0900; masters.remax-detroit.com

Researched by Sonya D. Hill: shill@crain.com | This list of the largest residential brokers is an approximate compilation of such companies in Wayne, Oakland, Macomb, Washtenaw and Livingston counties. It is not a complete listing but the most comprehensive available. Companies with headquarters elsewhere are listed with the address and top executive of their main Detroit-area office. Unless otherwise noted, information was provided by the companies. NA = not available. NOTES: 1. Formerly Real Living Kee Realty. 2. Formerly Hall & Hunter Realtors. Became affiliated with the franchise The Agency on March 21. 3. One principal broker. Five non-principal associate brokers. 4. Formerly Coldwell Banker Preferred Realtors.

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MAY 23, 2022 | CRAIN’S DETROIT BUSINESS | 11

FOOD & DRINK

ADVERTISING

Domino’s hopes for some levitation from ‘Stranger Things’ promo BY JON SPRINGER

Brand entertainment tie-ins don’t get any more elaborate than Domino’s Pizza’s introduction last week of an app with which customers can order a pizza, using facial recognition, on a virtual set of the Netflix sci-fi series “Stranger Things.” But the stunt does more than just show off a novel technology. The promotion — one of several brand partnerships aligned with the forthcoming release of the popular show’s fourth season — speaks to the growing need for brands to engage with young customers using the properties they love and the channels they inhabit, Kate Trumbull, Domino’s senior vice president of brand marketing, said in an interview. In this case, it just happens to involve paranormal powers, 1980s nostalgia, video game culture and a virtual reality environment to accompany a cultural property wildly popular with young viewers on a platform where — for now, at least — traditional advertising options don’t exist. And it comes just as scuffling Ann Arbor-based Domino’s could use a supernatural boost of its own. “I think [young consumers] love to experiment, and be immersed, and escape — and I think that’s where we’re going with the metaverse. That’s the future,” Trumbull said. “And with gaming being so popular, we think this will resonate. And we have to find ways to find audiences beyond linear TV — and have to in ways that are relevant, and don’t feel like advertising. Domino’s is calling the promotion

“Stranger Things” stars Caleb McLaughlin and Gaten Matarazzo are featured in a new longform video and commercial for Domino’s Pizza promoting a novel mobile ordering app. | DOMINO’S

“Mind Ordering,” and it really works — with some caveats. Given the requisite permissions from the user, the app uses a mobile phone’s camera that can recognize gestures and movements like bowing or shaking a head. Using these gestures, a customer can select and examine various images on the screen, including a Domino’s pizza box, in a set resembling the Hawkins National Laboratory, the secretive government lab at the center of many “Stranger Things.”. These gestures can trigger an order for customers who are signed into their existing Domino’s account and have previously designated an “Easy Order ” — a previous order that includes saved payment and fulfillment information, such as a preferred pickup site or delivery address..

Nothing is off the table The promotion comes as Domi-

no’s — which transitioned to a new CEO, Russell Weiner on May 1 — battles a challenging stretch on multiple fronts. Results in its fiscal first quarter were especially disappointing, outgoing CEO Ritch Allison said last month, as the chain dealt with the omicron coronavirus surge in January, further exacerbating a labor shortage that has challenged the company to effectively meet the demand for delivery, with some stores limiting hours or being unable to answer incoming delivery calls. U.S. sales turned negative in March, in part due to the effect of lapsing government stimulus payments from a year ago. And rising costs combined with a 3.6 percent drop in same-store sales led to a whopping earnings miss and subsequent stock selloff; shares are down by nearly 42 percent yearto-date. From Advertising Age

GET A HEALTHIER OUTLOOK ON CHILDHOOD Tune in to WJR 760 AM for Caring for Kids, a monthly radio program highlighting issues and efforts locally, regionally and nationally, that impact the health and wellness of children.

LISTEN TO WJR AM LIVE Tuesday, May 24 at 7 p.m.

Advocating for the health & wellness of children and families

SPECIAL GUESTS

JOHNNY CROWDER Founder & CEO Cope Notes

JANET NUNN, M.D. TODD KRIEGER Assistant Professor of Psychiatry Chief Officer of Strategic Partnerships and Community Affairs Michigan University The Children’s Foundation

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12 | CRAIN’S DETROIT BUSINESS | MAY 23, 2022

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The Custard Company Founder and CEO Jamal Jawad will open a second location next month. The business, established in 2019 in Dearborn, is projecting more than $1 million in sales this year. | THE CUSTARD COMPANY

Ford software engineer finds sweet success with specialty ice cream shop BY JAY DAVIS

A Dearborn-based business specializing in cool treats is becoming a hot commodity. The Custard Company, established in 2019 at 2801 Monroe St., is set to open a second location in mid-June at 23845 W. Warren Ave. in Dearborn Heights, according to 32-year-old CEO Jamal Jawad. The move comes as The Custard Company’s sales figures have increased in each of the last three years: from $80,000 the last half of 2019 to a projected $800,000 this year. The second location, which will have a staff of 20, is projected to do $400,000 in sales in 2022, according to Jawad. The original location has a staff of 15, and will grow to 23 before the end of the year. “I always wanted to open a second location as soon as our first location started getting some recognition,” said Jawad, who’s putting about $250,000 into opening the new specialty ice cream shop location. “The opportunity presented itself about six months ago. This is a big step for us. We think it’s time.” That recognition includes being a part of the Detroit Pistons Shop313 program, which this past season offered free promotions to one small business during each home game. The Custard Company, which offers frozen custard items including the Sweet Bun, the Wowffle and Injected Loaded Cones along with shakes, slushies and ice cream cookie sandwiches, also has 265,000 followers and a verified account on TikTok. The second location is larger than the first, at 1,400 square feet vs. 900. The idea is the same, though, as seating for 30 is offered outside only. The patio will be covered in the winter months along with having portable heaters. Jawad said he poured his life savings into opening the business, spending $200,000 to buy the building and land on which the original shop sits. He

would not disclose the cost to lease the new space, but said he’s signed a fiveyear flat-rate lease that’s negotiable after it expires. The new location will feature a drivethrough window, which will help it pull in about as much as the original location did in 2021 ($450,000). “You’ve got a lot of customers who come to places like ours who don’t want to get out of the car with their kids. They want to get their custard and eat it in the car (or) at home,” Jawad said. “This added element could be a game-changer for us.” The business itself could be a game-changer for Jawad, who works full time as a software engineer for Ford Motor Company He plans to run both locations and stay on at Ford, but will have help from 18-year-old Vice President of Operations Karim Kadouh. Kadouh, who began working part time at The Custard Company shortly after its July 2019 opening, helped seal the deal on the partnership with the Pistons. He’s also facilitated the growth of the business’ TikTok following. “Social media has been huge for us,” Kadouh said. That recognition couldn’t be stopped by a nearly two-month closure in the early stages of the coronavirus pandemic. The Custard Company closed from mid-March 2020 to May 1, 2020, when it began operating as carryout only. The business lost about $70,000 in revenue over that period, but customers were excited for its return. “We had a line all the way down Outer Drive. It was amazing to see because before we closed we had only been in business for about eight months,” Jawad said. “To have one location is a blessing. To have two is crazy.” Contact: jason.davis@crain.com (313) 446-1612; @JayDavis_1981

TECHNOLOGY

3D printing expo in Detroit showcases ‘new era of manufacturing’ Technology to create layers in precise shapes evolves, becomes tool to produce needed parts BY KURT NAGL

Once a trade show novelty, the 3D printer has become star of the show. The additive manufacturing process was center stage Tuesday at Huntington Place in downtown Detroit for RAPID + TCT, the flagship event of Southfield-based manufacturing association SME. Hundreds of engineers and company representatives roamed the showroom floor as machines hummed along, printing everything from precision car parts to a Mandalorian helmet. Nearly 400 exhibitors signed on for the three-day event, putting a compelling picture to buzzy phrases like “Industry 4.0” and “the next industrial revolution.” “A new era of manufacturing has arrived,” Barbara Humpton, president and CEO of Siemens USA, said during a keynote speech. “This revolution represents a convergence of our physical and virtual worlds, and what this convergence does is set the stage for additive manufacturing to remake the industrial world.” 3D printing technology, and additive manufacturing in general — a process that uses CAD software or 3D object scanners to direct hardware to deposit material, layer upon layer, in precise shapes to create an object — has evolved by leaps and bounds in the past few years from prototypes and toys printed at a snail’s pace to speedy production of parts in a wide array of products as mundane as coffee makers and as cutting edge as

but has since been used to produce parts amid supply shortages. “... It has transitioned into a tool for these manufacturers to improve and increase the production of badly needed parts in an era of supply chain disruptions and shortages,” Oakland County Executive David Coulter said in a news release last week.

Moves to diversify

A BigRep One 3D printing machine prints a three-foot-tall vase with PLA plastic during RAPID + TCT at Huntington Place in Detroit. | KURT NAGL/CRAIN’S DETROIT BUSINESS

SpaceX rockets. The global 3D printing market reached a value of $17.54 billion in 2020 and is projected to hit $79.4 billion by 2028, according to market researcher Reports and Data, which is based in India with an office in New

York City. The technology has not yet reached mainstream manufacturing, largely due to high costs of adoption, but there are plans afoot to change that. For example, Automation Alley’s Project Diamond has invested $10

million since 2020 in 3D printers for 244 local manufacturers, creating one of the largest 3D printing networks in the U.S. The project was launched to produce personal protective equipment or PPE during the onset of the coronavirus pandemic

Besides developing technology and ramping up speed to market, one area of focus for the industry has been diversification. Kicking off the conference, SME announced a new partnership with Women in 3D Printing in hopes of closing the gender gap in additive manufacturing. The organizations will join forces to produce future conferences, launch a mentorship program and co-author an annual report measuring diversity, equity and inclusion in the industry, according to a news release. Women in 3D Manufacturing is a nonprofit registered in California with more than 80 chapters across 36 countries. “It is important that the Additive Manufacturing industry is reflective of the real world, and we want to send a clear message that it is for everyone,” Nora Toure, founder of the nonprofit, said in the release. Contact: knagl@crain.com; (313) 446-0337; @kurt_nagl

ENERGY

Here’s what GM will pay for power at new Lansing EV battery plant Low-cost power from Lansing electric utility seen as a key to luring the massive investment BY CHAD LIVENGOOD

General Motors and LG Energy Solution are finalizing a 20-year electricity purchase agreement with Lansing Board of Water & Light to power the EV battery plant the Detroit automaker and South Korean battery maker are jointly constructing west of Lansing. The locked-in rate of 5.5 cents per kilowatt hour is far below Michigan’s 7.24-cent-per-kilowatt average for industrial electricity loads, which was likely a factor in GM’s decision to site a battery plant in the Lansing area. Dick Peffley, general manager of Lansing BWL, said the 20-year contract for GM and LG’s joint venture, Ultium Cells LLC, is “unprecedented” for the publicly owned utility company. “They jumped at this, they came here, they could have gone elsewhere,” Peffley said. “I’ve got to think that this rate is very, very attractive to them.” BWL’s rate was set assuming GM and LG’s 2.8 million-square-foot battery plant will use a baseload of more than 120 megawatts of electricity — six times the electricity a typical automotive assembly plant uses, Peffley said. “This rate does not negatively impact any existing customer, it won’t drive a rate increase,” Peffley said of the economies of scale used to set the

General Motors Co. and LG Energy Solution plan to construct a 2.8 million-square-foot plant to manufacture batteries for electric vehicles adjacent to GM’s Delta Township vehicle assembly plant west of Lansing. | JOHN F. MARTIN FOR GENERAL MOTORS

price. “It’s just the sheer size of 120 megawatts.” When the Ultium battery plant goes online in late 2024, the facility will increase the Lansing electricity company’s daily average load by 35 percent, Peffley said. “When somebody brings that magnitude of energy consumption to it, you get a very, very attractive rate,” Peffley said. Later this year, Lansing BWL has a new 250 megawatt natural gas-fired power plant — known as the Delta Energy Park — coming online that can accommodate the growth in industrial electricity usage, Peffley said. “We have ample power right now to supply this load,” he said.

Separately, GM secured a 15-year contract with DTE Energy Co. for the expansion of its Orion Assembly Plant at a rate of 4.3 cents per kilowatt hour, said Peter Ternes, spokesman for the Detroit-based utility company. “This rate will not impact any other business and residential customers,” Ternes said in an email to Crain’s. “In fact, we expect downward pressure on all rates because the large load associated with this rate will help offset some of the fixed costs of electric power generation and infrastructure.” DTE’s rate for GM is based on a 50-megawatt load factor for the expansion at Orion Assembly and was part of new economic development

electricity rates that the Michigan Public Service Commission approved in December, Ternes said. In late January, GM and LG announced plans to jointly invest between $1.5 billion and $2.5 billion into the construction of a battery manufacturing plant in Eaton County’s Delta Township, next to GM’s existing Delta Township Assembly Plant west of Lansing. GM’s Lansing area battery plant, which will employ up to 1,700 workers, will be the automaker’s third in the Ultium partnership with LG, along with battery plants under construction in Lordstown, Ohio, and Spring Hill, Tenn. Until this week, Lansing BWL officials had been under a non-disclosure agreement as the utility negotiated the electricity rate deal with GM and LG. A final contract has not yet been signed, a Lansing BWL spokeswoman said. The electricity rates GM secured for the Lansing battery plant and Orion Assembly Plant are more in line with southern states, which have historically had lower electricity rates than Michigan. In 2020, the annual average rate for industrial users in Michigan was 7.24 cents per kilowatt hour, according to the U.S. Energy Information Administration. That average rate was above all of Michigan’s neighbors but Wisconsin

(7.29 cents per KW): Ohio (6.16 cents); Illinois (6.7 cents); Indiana (6.98 cents). Tennessee and Kentucky, which recently lured $11.4 billion from Ford Motor Co. and its battery partner, had average industrial electricity rates of 5.33 cents and 5.31 cents per kilowatt hour, respectively, in 2020, U.S. Energy Information Administration data show. “I know what the rates are around the country and this (BWL rate of 5.5 cents per kilowatt hour) rivals any rate in the country,” Peffley said. GM viewed the electricity rates from BWL and DTE as part of the overall business case for investing in its home state, which includes $824 million in state taxpayer incentives. “It is always up to the government entities to determine if and when incentives are granted, but securing available incentives plays a very important part in the development of a competitive business case related to an investment project,” GM spokesman Daniel Flores said Tuesday in a statement to Crain’s. “Granting incentives helps us develop a strong business case,” Flores added. “They also indicate the willingness of the community and government officials to partner with us for continued growth and retention of jobs and a continued presence in the community, while helping us manage escalating costs.” MAY 23, 2022 | CRAIN’S DETROIT BUSINESS | 13

MARKETING

Identity PR aims to grow in a smaller office space BY KIRK PINHO

In the wake of the Oxford High School shooting late last year, the Oakland County Prosecutor’s Office knew its staff couldn’t handle the media onslaught that was sure to follow. For a few days initially before being turned over to another firm, that barrage of media requests — hundreds of them or more from local, national and international media — was handled by Identity PR, a public relations firm that just moved to downtown Birmingham following the best growth year in the company’s nearly 25-year history. Revenue grew 26 percent to $6.5 million in 2021, the company said. “If there’s one thing we’ve learned about communications and the business of what we do, it’s that clients were in a state of crisis and companies of all shapes and sizes were fac-

ing internal, external, a lot of communications chaos where they turn to us to lend a level of expertise and clarity,” said Andrea Trapani, managing partner of Identity. “The way that we were working changed, and certainly we saw an increased appetite in the market for what we do simply because our clients were looking for a level of clarity as the world was changing around them.” Founded in 1998 by Mark Winter, Identity has a staff of 30 and has more than 80 clients on retainer. The firm did work for about 120 in the last year, including one-off projects and crisis communications. Since the first few days, communications work for Prosecutor Karen McDonald’s office surrounding the Nov. 30 shooting has been handled by Detroit-based Moment Strategies LLC, the PR and communications firm started by Alexis Wiley, the former chief of staff to Detroit Mayor

From left to right: Erin Robinson, partner and vice president of account services; Andrea Conrad, director of creative operations and special projects; Mark Winter, founding partner and president; Andrea Trapani, managing partner; Elizabeth Strzalka, vice president of finance and operations; and Brandon Chesnutt, partner and vice president of digital strategy and development. | IDENTITY PR

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PEOPLE ON THE MOVE

To place your listing, visit www.crainsdetroit.com/people-on-the-move or, for more information, contact Debora Stein at 917.226.5470 / dstein@crain.com ARCHITECTURE

NSURANCE / FINANCIAL

STAFFING / SERVICES

Quinn Evans

Northwestern Mutual Wealth Management

Sanford Rose Associates - JFSPartners

We look forward to the continued growth of our practice as we provide a roadmap to the dreams and goals of our clients whether Isufi they are a business owner developing a business continuity plan or building a successful career as a physician or sales executive. Matilda Isufi (Insurance Operations) and Angelo D’Orazio D’Orazio (Investment Operations) understand that dreams matter. Michael Sosnoski’s Wealth Management Team develops and manages personalized financial plans to assist clients in reaching their goals, preserve what they already have achieved and protect against unexpected life events. Our long-term relationships prepare and lead to a retirement income that is designed for years of financial piece of mind. Your Dream – Our Team – One Plan

JFSPartners – a member of the Sanford Rose Associates Network of offices – has named Kristen Andrews a Partner of JFSPartners, a leading Accounting & Finance recruiting firm assisting organizations hire the talent they need to realize their business visions. “Kristen has many years of experience placing mid-level to senior level finance and accounting professionals in the Detroit Market. She has a distinct ability to understand the types of candidates that fit well with the right organizations and leaders. Kristen’s relationships in Detroit span decades and allow our clients and candidates to benefit from her deep understanding of the marketplace” said President Joseph Sos.

Willis Towers Watson WTW has appointed Beth Lieberman as the new Michigan market leader. Beth leads nearly 400 colleagues in Detroit, Grand Rapids and Ann Arbor. With over 25 years of experience, Beth, a credentialed actuary, has served in leadership roles across the company. Beth has deep expertise across multiple disciplines and is responsible for providing innovative solutions across the areas of people, risk and capital. She’s a proud University of Michigan graduate and serves on the board of Lace Up Detroit. 14 | CRAIN’S DETROIT BUSINESS | MAY 23, 2022

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C O N TAC T

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Tom Jester, FAIA, FAPT, LEED AP has been named chief operating officer of Quinn Evans, a 200-person architecture, interior design, planning, landscape architecture, and historic preservation firm. Quinn Evans has six offices in the Midwest and mid-Atlantic, including Detroit and Ann Arbor. A national leader in historic preservation, Jester joined Quinn Evans in 2006 and has directed many of the firm’s most challenging projects. He will oversee operations, staffing, and technical resources.

Laura Picariello Reprints Sales Manager lpicariello@crain.com (732) 723-0569

Mike Duggan and Fox 2 News reporter. “Identity PR did a fantastic job,” Wiley said. “One of the biggest challenges the prosecutor’s office faced was managing a monumental case that Oakland County had never seen, while also having to navigate an onslaught of national and international media and managing the dignity and respect and balancing the respect that was due the families that have been so deeply impacted. They did a great job of setting an early framework.” During those few days, Identity says it worked with organizations such as CNN, ABC News and the New York Times. But the company’s work goes well beyond local tragedy. It worked on the announcement in January that Hudsonville Ice Cream was creating seven new Little Debbie flavors, work that Identity says got more than 1,050 media mentions with more than 2.1 billion impressions in not only local news outlets but also USA Today, People, Food & Wine, Southern Living, NBC, Fox Business and Yahoo! It’s also worked with baked goods wholesaler Bill Knapps, High Times magazine, luxury interior design company KSI, the Michigan Association of Justice, Absopure, the Motown Museum, the Detroit Symphony Orchestra and La-Z-Boy. Don Tanner, a founding partner of the Farmington Hills-based public relations firm Tanner Friedman, said Winter, who he described as a friend, “has always been very entrepreneurial.” “One of the things I noticed early on was they excelled in a number of areas, but one that stood out was building a real estate practice beyond this market. They had a real niche working with clients who weren’t even based here and I found that pretty impressive,” Tanner said. “They were also one of the first agencies to focus on social media.” Trapani says that its employee retention rate is an exception in an industry with high turnover. The average tenure at Identity is 5 1/2 years, Trapani said. “We have people who are approaching the 20-year mark, like myself, and all of our leaders in the agency have been with the company

for over a decade,” she said. As the company has grown, however, — including adding 25 new clients last year — it has downsized its space as many others have done during the COVID-19 pandemic, moving from its longtime headquarters in Bingham Farms in about 8,200 square feet at 13 Mile and Telegraph roads to a new 2,500-square-foot office in downtown Birmingham at 300 Park Ave. “We determined after really taking stock from our personnel, listening to what they learned, listened to optimal working conditions, and also realizing that connection with our clients and being in the field and more collaborative — those were the things that prompted us to look at a new dynamic for the agency going forward,” Trapani said. The lease deal was brokered by Auburn Hills-based Team Core and the office space was built out by West Bloomfield Township-based Singh Management Co. Other companies in the region have consolidated or downsized their office footprints during the pandemic as hybrid work models have remained prevalent. For example, architecture and planning firm HED is moving its Michigan office from 36,000 square feet in the Beaumont Health headquarters building in Southfield to 19,000 square feet in the building at the corner of South Main and Fifth streets that used to house downtown Royal Oak’s Barnes & Noble Inc. bookstore. Deloitte LLP shed several floors of office space in the Renaissance Center and moved into WeWork space about one-third its previous footprint last month, and Blue Cross Blue Shield of Michigan is leaving some of its space in the RenCen, as well. Bank of America in Troy is vacating its signature regional headquarters on Big Beaver Road and dispersing its employees into three other Oakland County locations. “When the world was really thrust into a new way of working, we were poised to do so just from our technology that we had already integrated into the agency, and we were poised to do so well,” Trapani said. “The reality was that it worked.” Contact: kpinho@crain.com; (313) 446-0412; @kirkpinhoCDB

LANDY

From Page 3

The three can choose to expand the board. An asking price for the real estate has not yet been determined, but it would easily be in the eight digits. “In the grand scheme, this is not a huge foundation, nor was it intended to be,” Kopietz said. “But hopefully, we’ll be able to do some good with it.” It’s perhaps the first time in recent memory something like this has happened, longtime real estate industry observers said. Typically, portfolios like Landy’s either go to next of kin or are sold off for things like inheritances, they said. But Landy, who had no children, took a different route. “In all cases I can recall, the portfolio went to the next generation per estate planning,” said Lawrence McLaughlin, a real estate attorney who spent more than four decades at Detroit-based Honigman LLP, where he had been chairman of its real estate department for two decades. “In fact, most maturing patriarchs start putting children and grandchildren into their deals before they pass.” “I have seen assets sold for estate/ inheritance purposes but not to fund a foundation,” said Denise Lewis, another former Honigman real estate attorney.

Quite the collection The properties, like Landy himself, are an eclectic ensemble. `There are the recently redeveloped James Scott Mansion on Peterboro, sometimes referred to as the “Spite House” because of its quirky history. `There are the Addison, a former hotel

A banner that hangs from a building on Cass Avenue honoring the late Joel Landy says “We pay tribune to the life and legacy of a Detroit legend.” | KIRK PINHO/ CRAIN’S DETROIT BUSINESS

that now houses 40 apartments plus the Pho Lucky restaurant at Charlotte Street and Woodward Avenue; the Leland Lofts building, straddling Lafayette Park and Eastern Market on Antietam Street, was formerly the Nellie Leland School for Crippled Children; and the former Dewey Center School at the John C. Lodge Freeway and

Fourth Street. `There are land and vacant buildings and homes, some small and nondescript, others larger, assembled over the years in a hodge-podge fashion. In all, there’s nearly 250,000 square feet and 6.5 acres of land, according to documents provided by Southfield-based brokerage house Signature

ERB

Contact: kpinho@crain.com; (313) 446-0412; @kirkpinhoCDB

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CLASSIFIEDS

From Page 3

“We look forward to continuing to deliver on our mission of advancing the economic, environmental, and social interests of our region in ways that meet the present and anticipate the future.” Fred Erb, who built his uncle’s lumber and coal business into a multistate enterprise with $280 million in sales before selling it in 1993, died 20 years later at the age of 90 after a long battle with Alzheimer’s. Barbara died less than a year later. In setting up the foundation, the Erbs did not specify the form they wanted it to take, Hawkins said in an email. The foundation operated for the past 14 years as a perpetual funder, but recently, its board made the decision to shift to a spend-down model that will grant all of its remaining assets by 2034. The children of Fred and Barbara, John Erb and Leslie Erb Liedtke, both board members, “want to be sure that the foundation makes high impact gifts that support their parents’ interests,” Hawkins said. As the foundation shifts to a spend-down model, “they will both be personally involved working with staff and fellow board members in defining the approach to be taken and the strategic plan for the foundation’s spend-down period,” he said. “We are very excited to continue our collaborations with grantees and fellow funders as we start this new journey for the Foundation. We believe we will have great impact through our grantmaking and grantee collaborations,” Hawkins said in

Associates Inc., whose president, Steve Gordon, has the listing. Gordon said he is identifying potential buyers and hopes to have a sale finalized by the fall. Likely on the list: The Ilitch family’s Olympia Development of Michigan real estate company, which owns vast swaths of property in the area sur-

rounding Landy’s real estate stronghold. He started venturing into property ownership when his car repair business on Gratiot at Conner, J&L Custom Auto Works Inc., became successful. Landy — who often told people how he bought his Detroit house for $4,600 and, along with it, a trove of antiques inside — was also well known for his vast collections of things ranging from old cars to model trains. Gordon, who also has a car collection, feels a certain kinship with the late developer who made his way into real estate by working with his hands. “He was a car collector. He liked different stuff. That’s what I liked about him,” Gordon said. “I have that kind of stuff. I’m into that kind of stuff where most real estate people are not.” Some of Landy’s other things, such as the cars, are in the process of being sold by Baldori, Kopietz said. “The majority of the cars, at least those of value, have been sold. There are still some left, and he’s working through the process to find buyers for those,” Kopietz said. In part, those collections led to Landy being featured in The History Channel’s “American Pickers” show. An Oak Park native who attended Cass Technical High School, he ultimately found himself in Detroit real estate laying the seeds for things to come years down the line. “If it weren’t for Joel, there wouldn’t be Peterboro-Charlotte Historic District,” Kopietz said. “There’s a lot of stuff and a lot of activity in this area that I don’t think would be around today if it weren’t for people like him having the vision and wherewithal to stick to it over all those years.”

To place your listing, contact Suzanne Janik at 313-446-0455

MARKET PLACE REQUEST FOR PROPOSALS Requests for Proposals are being accepted for:

Graphic Design Services 2022 Response Due: June 6, 2022

Issued: May 4, 2022

Sector Partnership Training Services 2022 Response Due: June 13, 2022

Fred and Barbara Erb | LIN JONES / UM PHOTO SERVICES

the email. At least two other spend-down foundations are operating in the region: the Ralph C. Wilson Jr. Foundation and the A.A. Van Elslander Foundation. Nationally, an increasing number of foundations with limited life spans are being set up, including some that shift from perpetual operating models, said Teri Behrens, executive director of the Dorothy Johnson Center for Philanthropy at Grand Valley State University. In Michigan, however, Behrens could point to only one other foundation of that size that has gone a similar route. Grand Rapids-based Dyer-Ives Foundation shifted to a spend-down model in 2010 and made its last grants in 2016. GVSU holds the foundation’s archives. There are several reasons for having a limited lifespan, Behrens said.

Some donors want their family or people who knew them to make the funding decisions. Other donors believe that today’s problems should be addressed with today’s resources, she said. And still others believe that they are more likely to have an impact if there’s a higher concentration of resources over a short period of time. It’s not a common occurrence to see foundations convert to spenddown models, “but we do see it happen from time to time as trustees reassess the best way for their philanthropy to meet their mission,” said Kyle Caldwell, president of the Council of Michigan Foundations, in an emailed statement. “It shows the great flexibility of philanthropy.” Contact: swelch@crain.com; (313) 446-1694; @SherriWelch

Issued: May 16, 2022

The Mayor’s Workforce Development Board (MWDB) is directly responsible and accountable to the State of Michigan, Labor and Economic Opportunity-Workforce Development (LEO-WD) for the planning and oversight of talent development programs in the City of Detroit. Designated by the MWDB, Detroit Employment Solutions Corporation (DESC) serves as the fiscal and administrative entity that provides workforce services to job seekers and employers. DESC’s primary funding streams include Workforce Innovation and Opportunity Act (WIOA), Temporary Assistance to Needy Families (TANF) that funds Michigan’s PATH (Partnership. Accountability. Training. Hope.) employment program, Food Assistance Employment and Training (FAE&T), Wagner-Peyser Employment Services (ES), and other public and private funding. The Corporation enters into contracts with qualified entities to provide workforce development programs and services to job seekers and employers. American Rescue Plan Act (ARPA) and Center for Disease Control Foundation (CDC) funding may support contracts resulting from competitive bid process. DESC is seeking proposals from qualified individuals, organizations and/or firms.

Bid package for this RFP is available for download at this DESC website:

https://www.descmiworks.com/opportunities/rfps-and-rfqs/. Mayor’s Workforce Development Board Cynthia J. Pasky, Co-Chairperson David E. Meador, Co-Chairperson

Detroit Employment Solutions Corporation Board Calvin Sharp, Chairperson Detroit Employment Solutions Corporation Terri Weems, President

An equal opportunity employer/program. Supported by the State of Michigan, Labor and Economic Development, Workforce Development (LEO/WD). Auxiliary aids and services available upon request to individuals with disabilities. 1-800-285-WORK. TTY: 711.

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STUDY

From Page 3

But Brian Peters, CEO of the Michigan Health & Hospital Association, an advocacy group that represents the state’s hospitals, contends the RAND study is flawed and the metrics do not represent an accurate image of hospital costs. “The latest RAND hospital pricing transparency study uses Medicare as a benchmark, ignoring that Medicare reimbursement fails to cover the cost of delivering healthcare services,” Peters wrote in a statement to Crain’s. “The RAND study suffers from a myriad of other flaws that include data limitations, failing to recognize rising costs of care, and ignoring the growing administrative costs from commercial insurers. Each RAND report on hospital pricing makes broad claims that are based on a cherry-picked and limited data set. This report looks at claims for just 2.2 percent of overall hospital spending. In addition, hospitals have seen a dramatic rise in costs of labor, drugs, supplies and equipment that have put enormous pressure on the ability of hospitals and health systems to provide care to patients and communities. Most hospitals operate on razor-thin margins while Medicare reimbursement rates do not cover the actual costs of the care provided and are slow to respond to inflationary pressure.” Even still, Michigan ranks among the lowest-cost health care states for employers and insurers, according to RAND. But the health care costs private

insurers and employers pay to health systems across the state varies wildly. For instance, employers and insurers paid Borgess Medical Center in Kalamazoo 406 percent of what Medicare paid for the same services between 2018 and 2020, according to the Sage Transparency dashboard created by the Employers’ Forum of Indiana. Perhaps more startling is Borgess only requires 80 percent of what Medicare pays to break even financially, according to the tool. RAND researchers attribute the growing pricing disparity to hospital mergers and consolidation. For every 10 percent of market share a system gains, prices rise by 0.5 percent for insurers and employers over Medicare, the study said. Coincidentally, Spectrum Health, one of the highest cost systems in the state, merged with Southfield-based Beaumont Health in February in a deal that made a $12 billion, 22-hospital system, the state’s largest. Spectrum reported $291.6 million in operating income on $9.27 billion in operating revenue for a 3.2 percent margin, according to an audited financial statement. But while Medicare prices are designed to provide modest profit margins for efficient hospitals, some Michigan hospitals charged insurers and employers well above Medicare pricing without turning much of a profit at all. Henry Ford Health, which includes five hospitals, reported an operating loss of $168 million in 2021, or a negative 2.5 percent margin, on net patient revenue of $4.2 billion. Cutting into its margins was a $135

Hospital costs There is a growing pricing disparity between what private insurers in Michigan pay versus what Medicare pays for the same hospital services. 306%

Spectrum Health, Grand Rapids 255%

University of Michigan Health System, Ann Arbor Henry Ford Hospital, Detroit

217%

DMC Harper University Hospital, Detroit

216%

Harper University Hospital, Detroit

216%

Ascension St. John Hospital, Detroit

213%

St. Joseph Mercy, Ann Arbor

205%

St. Joseph Mercy Hospital, Livonia

202%

Henry Ford Hospital, West Bloomfield

202%

Ascension Providence Hospitals, Novi and Southfield

198%

Beaumont Hospital, Dearborn

184%

McLaren Oakland, Pontiac

181%

St. Joseph Mercy, Chelsea

179%

St. Joseph Mercy Oakland, Pontiac

177%

Beaumont Hospital, Troy

174%

Beaumont Hospital, Farmington Hills

173%

Beaumont Hospital, Royal Oak

172%

Beaumont Hospital, Grosse Pointe

171% 168%

Ascension Macomb Oakland Hospital, Warren

161%

Henry Ford Hospital, Clinton Township

161%

Ascension Providence Hospital, Rochester Pontiac General Hospital, Pontiac

114%

The RAND 2022 survey uses Medicare reimbursement rates as a benchmark against what employers and insurers pay for the same services. The study is designed to show how expensive a hospital’s costs are over a constant, not a suggestion that private payers see equal charges as Medicare. SOURCE: SAGE TRANSPARENCY, DASHBOARD.SAGETRANSPARENCY.COM/RAND 2022 SURVEY CRAIN’S DETROIT BUSINESS GRAPHIC

million in COVID-19 related costs and a $200 million shortfall from insurance claims. It’s clear that what Spectrum charges employers and insurers for services versus what Henry Ford

charged played a role in profitability. However, HFH was able to post a positive total income of $41 million, or a margin of 0.6 percent, thanks to $200 million in returns from its investment portfolio.

BHARGAVA

16 | CRAIN’S DETROIT BUSINESS | MAY 23, 2022

Contact: dwalsh@crain.com; (313) 446-6042; @dustinpwalsh the Washington Post. To be sure, the scale and reach of NewsNet is vastly smaller than those properties. It launched in Cadillac in Wexford County in 2019, and Bhargava said the company has largely lacked capacity to know its specific viewership levels, something it is working to implement. NewsNet’s founder, Eric Wotila, retained a 10 percent stake following the acquisition by Bhargava, and holds the title of president under the new ownership structure.

From Page 1

to network executives. In doing so, Bhargava said he seeks to deliver a credible, headlines-focused national news channel, free of political opinions. Still, he concedes the main goal is to find a less costly avenue for advertising his consumer products. “For me, it’s more of a media company than a news company,” Bhargava told Crain’s in an interview last week. Bhargava’s 5-Hour Energy drinks account for about $1 billion in annual revenue, and the executive said the company spends anywhere from $30 million to $80 million annually on advertising. In recent months, his media-buying costs had been skyrocketing by 50 percent or more, he said, although he was unable to pinpoint why those costs were going up. The majority of that advertising is on television, he said. “So we’re going to end up with a television system and our plan is to cover at least half of the United States,” Bhargava said. “And then we have a way to not only advertise our product, but maybe to barter some of the advertising with some of the other outfits. … And this (NewsNet) kind of pays for most everything, which I kind of like.” Ad spends in general are on the rise. U.S. media spending is forecast to hit $320 billion this year, a 12.2 percent increase, according to figures from Ad Age, citing data from Publicis Groupe. David DeMuth, the chair and CEO of Southfield-based advertising firm Doner Co., said it’s difficult to say whether Bhargava’s strategy will work. That’s especially true as advertising has become more fragmented, he said. “I think for advertisers, you really have to understand your audience and

Similarly, Detroit nonprofit insurer Blue Cross Blue Shield of Michigan reported a $374 million operating loss last year. But the Blues were able to record $360 million in income on $32.5 billion in revenue for the year after the health insurance losses were offset by the performances of its nonhealth insurance subsidiaries and investment portfolio, which generated $907 million in positive returns. There is, however, a correlation between costs and hospital quality, according to the RAND study. Nationally, hospitals with private insurer and employer costs below 150 percent of Medicare costs, also had lower quality ratings from the Centers for Medicare and Medicaid Services, which rates hospital quality on a 5-star system based on mortality, safety of care, readmission, patient experience and timely and effective care. Roughly 22 percent of high-priced hospitals, those where employer costs are above 250 percent of Medicare costs, scored a five-star rating, compared to 30 percent of medium-priced hospitals, between 150 percent and 250 percent of Medicare costs, were deemed five-star by CMS. Spectrum Health, for instance, is rated as a four-star by CMS where St. Joseph Mercy Chelsea received a five-star rating. Comparatively, 48 percent of medium-priced hospitals in the U.S. received A grades from the annual Leapfrog Hospital Safety Grade study released early this year, compared to 43 percent of high-priced hospitals.

Varied interests

Entrepreneur Manoj Bhargava is now the majority owner of NewsNet, a 24-hour news channel based in Farmington Hills. | CONTRIBUTED

follow them and find them more efficient placement now, and those opportunities are out there,” DeMuth told Crain’s. “But media has become a much more data-driven endeavor than ever before. For (Bhargava) to buy a media platform and advertise 5-Hour Energy on it, like, I don’t know if that’s gonna get return on investment on that or not. It depends who’s watching that media.” From a content perspective, Bhargava said they’ve chosen a simple motto to follow for the network: “News … like it used to be.” The style of the programming is based on Headline News, now called HLN, a CNN-owned news network that primarily focuses on delivering straightforward news programming on a variety of topics. For example, recent news segments focused on various

health care issues, primary elections in Pennsylvania and national weather forecasts. “There’s so much of the opinionated media out there, left and right,” said Phil Hendrix, NewsNet’s news director. “We’re really just committed to trying to do journalism the way it used to be done.” NewsNet has been beefing up its staff with the hiring of veteran news anchors including Glenn Ray and Jill Washburn, and headcount currently stands at about 20, a number that could double over time, said the company’s CEO, Vince Bodiford, a Bhargava lieutenant. While acknowledging that the deal is largely an advertising play for some of his products, Bhargava said consumers shouldn’t expect to see 5-Hour Energy ads plastered on the

newscast, which he said will have the appearance of a traditional newscast focused on the news of the day, human interest topics, weather and other staples of broadcast news. Other advertising will also be typical of what is seen on traditional newscasts, he said. Still, over time, Bhargava said the plan is to transition much of 5-Hour Energy’s advertising to the network. Bhargava is far from the only wealthy businessperson to purchase media companies in recent years. Tesla founder and wealthiest man in the world Elon Musk late last month entered into an agreement to acquire social media company Twitter for about $44 billion, a deal he has since tried to walk back or halt. In another high-profile example, Amazon billionaire Jeff Bezos owns

The investment in NewsNet is not Bhargava’s only play in the television space. Through a subsidiary, the businessman owns about 5.2 percent of Gray Television Inc. (NYSE: GTN), an Atlanta-based broadcasting company operating in nearly 100 American markets, including Michigan affiliates WILX in Lansing and WNEM in Flint. Bhargava’s stake in the company is worth about $92 million based on the $20 stock price for Gray Television on Thursday. Bodiford said that investment stands separate from the ownership of NewsNet. Bhargava’s other business interests are varied, as Crain’s has reported, and include family office consulting, a water purification venture, as well as venture capital investing in health-focused startups. While it’s unclear just what kind of dividends the NewsNet venture may pay, Bhargava said the investment is something for the long term. “I expect this whole thing will take a couple of years,” he said of the plans with the news channel. “This is long term for me. Two years is really long.” Contact: nmanes@crain.com; (313) 446-1626; @nickrmanes

FORECLOSURES

From Page 1

But that owner hadn’t paid property taxes on the house, and when it was foreclosed, Whitehead got a reprieve: Through a program called Make It Home, she got the right of first refusal to buy the foreclosed home that she was already living in. “It has been a blessing like no other,” Whitehead said of Make It Home. “I thank God for them all the time.” For a third year, some homeowners at risk of property tax foreclosure have gotten relief due to the ongoing coronavirus pandemic. But for more than 4,000 property owners in the city of Detroit, the time has run out. Eric Sabree, the Wayne County treasurer, said 4,087 properties in the city were foreclosed on, along with 663 properties across 11 other Wayne municipalities. The treasurer said no homeowner who owed taxes for 2017, 2018, 2019, 2020 or 2021 lost a home that was their primary residence, but those who owed prior back taxes did, as did other owners who don’t live in the properties that were lost. There is still some help available for homeowners in default: A statewide program that can cover up to $25,000 in mortgage payments, back taxes and other home fees beginning with money owed in 2019 might free up enough funds for homeowners who are behind to pay what they owe for earlier years, Sabree said. Hence the decision to extend the relief to those who owe taxes going back to 2017. “They have a chance,” he said. More than 19,000 people have applied for help from the Michigan Homeowner Assistance Fund; more than $3.3 million to pay property taxes has already been distributed, according to data from the state. Sabree said nearly 1,000 Wayne County residents who were due to be foreclosed April 1 were pulled out of the pipeline because they had applied for help from the state.

Make It Home For the homes that remain in foreclosure, Make It Home can help renters already living there stay in place and become homeowners themselves. It works like this: People already living in foreclosed properties in the city of Detroit are asked by canvassers about their interest in and ability to buy the homes. The city has the right to pull houses that would otherwise be auctioned off in the fall. If someone is interested in participating in Make It Home, the government takes the property from the treasurer, then works with United Community Housing Coalition to sell those houses to the residents for the cost of back taxes owed. Residents interested in the program can call 313-405-7726. Whitehead, who teaches current events at a middle school and is getting her master’s degree, said she paid about $4,000 in back taxes to acquire the house through the program. All told, she estimated she put $25,000 into the property. A self-described bad renter, Whitehead said the program’s counselors never let her forget that she needed to make a payment. Now, the house is a place of relief for herself and her three kids. “I’m OK with the stress of being a homeowner,” Whitehead said of paying off the house, “because I’m a homeowner.” The city of Detroit is spearheading a door-knocking program to let resi-

Howtoria Whitehead at her home in Detroit, which she was able to buy after her landlord was foreclosed upon for nonpayment of taxes. | NIC ANTAYA FOR CRAIN’S DETROIT BUSINESS

dents in foreclosed houses know they have the option to buy the homes they’re living in, like Whitehead did. Chelsea Neblett, the financial empowerment manager for Detroit’s Department of Neighborhoods, said teams of people have been knocking on doors for more than a month to talk to residents about their options. “It’s the best and highest opportunity to stay in the property,” Neblett said. “We’re not the foreclosing government unit, but we care very deeply that residents stay in their homes.” The Make It Home program started in 2017, but new homeowners haven’t been added in recent years because the pandemic halted most foreclosure action. Ted Phillips, the executive director of the UCHC, said more than 1,100 households had participated in Make It Home since it started; the vast majority are still in those houses. “We needed creative ideas for how to take something completely horrific and find a silver lining,” Phillips said. In previous years, he said, the average purchase price was $3,800. Now, with more years of back taxes and rising values, he expects the homes to cost on average $7,500. But UCHC, which bought 80 homes for $300,000 in the program’s first year, now has about $3 million to work with. Phillips said the homes, which in the past were usually paid off in a year so the money could be reinvested into the next year’s program, might take two years or longer to pay off now. Phillips said about 500 households participated each year in 2018 and 2019. This year, more than 300 residents have started the process already. There are more than 1,700 rental properties that were foreclosed, Sabree said, where renters may be eligible.

Making a difference Phillips said the program has made a huge difference for individuals who were worried about losing the roof over their heads and having to leave their communities. One woman talked about how glad she was that she didn’t have to lose her neighbors, Phillips said, while a man who was going through a difficult period said during a time when he

thought he wasn’t capable of doing anything, being able to save his family home helped him survive. “The stories we hear, they’re just incredible,” Phillips said. “It’s hard to quantify, but it’s amazing.” Andrea Jordan was able to use Make It Home to buy the house she lives in with her six children after the landlord failed to pay taxes and stopped returning phone calls. Jordan, who was trying to improve her credit score so she’d be able to purchase a house, said the $1,200 in back taxes to be able to buy her house was relatively easy for her to accomplish — she was already paying $500 a month in rent. She paid it off before the deadline. Jordan said she’s told friends about Make It Home and some other help that’s available. As a homeowner, her expenses have gone down and she’s been able to save money to take the family on vacation — they’re planning to go camping this month, a first for them. And Jordan said she feels good having been able to secure a home for her children. She’s even

“It’s almost like taking a bucket and trying to bail out a boat,” he said. “I think they all can do more.” The potential Make It Home buyers need to have savings and need to undergo counseling and a background check to ensure they don’t have outstanding warrants. The homes are inspected to make sure they’re safe and habitable. Neblett, with the city, said Make It Home and other programs can help stabilize areas by keeping people housed and limit additional vacancies after years of foreclosures and disinvestment. “There weren’t the resources that there are now,” she said.

Principal residence exemptions

While the number of foreclosures in the city is relatively low compared to pre-pandemic years, Phillips said he still has some concerns about the way homeownership is determined, for the sake of foreclosure. A principal residence exemption is used as a proxy to “IF THEY KNEW ABOUT THIS PROGRAM, determine if a home is owner-occupied HALF THE PEOPLE WHO LOST THEIR — it’s a statewide HOUSE WOULD NOT LOSE THEIR HOUSE.” exemption that lowers taxes for people — Brenda Harris, who works on the property who live in a home tax exemption program for the Detroit they own — but not Association of Black Organizations all homeowners looking into buying the lot next door, have applied for the PRE, and some so the family has more land. investor-owned homes still have them “It’s an amazing opportunity,” she from before they were sold. said. “Anybody staying in a property That means some owner-occupied should be able to purchase it if the homes may have been foreclosed on owner doesn’t want it. They already inadvertently, if the owner didn’t have stay there. Why not give them an op- the exemption. And some invesportunity to purchase there?” tor-owned houses that should have Horace Sheffield III, CEO of the been foreclosed were pulled from the Detroit Association of Black Organi- rolls. Phillips said he thought that was zations, said people often feel guilt the case for more than 100 properties when they lose their property. And in the city. foreclosures, he said, bring down enBrenda Harris, who works on the tire neighborhoods as the houses get property tax exemption program for stripped and sit empty. Neighbor- the Detroit Association of Black Orgahoods that are in good shape can nizations, said ensuring that people quickly deteriorate as those who are who are eligible for exemptions get still in their houses become discour- them can help keep people from foreaged. closure — particularly for low-income “It’s like a cancer,” he said. residents. Make It Home, he said, is a “tre“If they knew about this program, mendous effort” by a lot of different half the people who lost their house people. But Sheffield said additional would not lose their house,” she said. efforts are constantly needed to keep Margaret Dewar, a professor emeripeople housed. ta of urban and regional planning in

the University of Michigan’s Taubman College of Architecture and Urban Planning, said she’s been tracking some of the homes that were foreclosed in 2017 — some of which faced foreclosure again this year. There are several, she said, that have a PRE but are clearly owned by companies and not individuals. It’s a problem, she said, because then businesses are getting a tax break they haven’t earned — and in some cases, avoiding foreclosure based on incorrect information about ownership. Investor owners can profit from disinvestment, she said, while owner-occupants may be falling through the cracks and losing their homes. “As a public official, they need to be even-handed and apply the policies that they declare,” she said. “There ought to be more enforcement of the PRE.” The issue is longstanding, said Alex Alsup, vice president of research and development for Regrid. For years, he said the PRE data was “unusably bad” in Detroit. “They don’t know which homes are occupied or not,” he said. Sabree agreed that the data wasn’t always accurate, but said his office also uses door-to-door visits to help determine occupancy. The PRE errors are corrected when they’re found, he said. Phillips said even when the problem is corrected, owners who should not have gotten a PRE simply have to pay the back taxes they owe. “Investors who should by their very nature know the system maneuvered the system in some way to unfairly benefit themselves,” he said. But Alsup said he expects that to happen less and less as property in the city becomes more desirable. Until 2019, Alsup said, landlords would frequently milk properties, extracting rent and failing to pay taxes until they just walked away. But now, the market has changed and with values rising, he expects more legitimate landlords to value the homes themselves. By the time the remaining homes are auctioned in the fall, he expects more competition and higher prices. “It’s not the same cycle of blight and vacancy,” he said. Contact: arielle.kass@crain.com; (313) 446-6774; @ArielleKassCDB MAY 23, 2022 | CRAIN’S DETROIT BUSINESS | 17

THE CONVERSATION

Sherita Smith thinks it’s time Detroiters demand respect After several years leading the Grandmont Rosedale Development Corp., Sherita Smith changed directions last fall and joined the Community Development Financial Institution Cinnaire as vice president of community development. The role gives her a broader scope to look at community needs from a citywide, systems lens. A Detroit native with four sons, she’s spent a lot of time thinking about what Detroiters need and what they should demand. With Cinnaire, she’s had the opportunity to pilot affordable housing solutions like a lease-toown program, among other work. | BY ARIELLE KASS  What is it that you feel like you can do at Cinnaire that you didn’t have the opportunity to do at some of the more focused community development roles you’ve had? Well, some of the things that we know about our neighborhoods and the magnificent, hardworking organizations and residents leading them is that there’s a lot of disinvestment, right? Access to capital is a real issue for moving forward certain projects and plans and community. And so, that’s where a (Community Development Financial Institution) should be able to come in. It’s kind of that middle space between bigger banks and the community to be able to be a little more creative and flexible. … One of the things we want to look at is how do we help to reverse that historic under- or disinvestment, particularly resourcing BIPOC and women-led developers and community development organizations and communities to counteract some of the impacts of past discrimination or redlining.  You said this is your life’s work. Can you tell me a little bit more about what it is that attracted you? I feel very strongly about what Detroiters deserve, and I feel like I’m in and of Detroit, been here my whole life … And so I have this very strong vision of everybody being able to live in an opportunity-rich community, and by that I mean, you have access to everything that you need to thrive, whether it’s quality housing, educational opportunities, access to employment, all of those normal things. Those are critically important to your quality of life and your life outcomes …. So now raising my own children here, I wanted to be part of finding solutions, and expanding and creating opportunities and just kind of not really

Sherita Smith, vice president of community development, Cinnaire.

ladder of starting to build assets and wealth building. You just have so many more options when you own a home and have resources; it can help to solve other problems for folks if you have equity in your house.  And it’s particularly been a problem for Black residents in the city. I feel like Detroiters have been through a lot. Whether it’s over taxation or the over taxation actually leads to your property being essentially taken from you. And then to come back and say, ‘Oops, we made a mistake. We’re sorry, but we can’t pay you back.’ Like that’s just not — I don’t see where that would be acceptable anywhere. … I think we just got to start to show Detroiters more respect, and I think Detroiters have to start demanding more respect.  What effect does a rising area median income have on affordability? We hear it all the time, how too many Detroiters are cost burdened in their housing. I don’t think the solution is to just like keep trying to make lowerand lower-income housing. I think the solution is really looking at what’s happening in folks’ lives, that they’re living on these really small margins and what can we do as a society to help people move economically. What is hindering economic mobility for people in our city in our neighborhood?

wanting to take no for an answer.  Can you tell me a little bit more where your interest in affordable housing came from? Housing is such a critical component. If you are shelter insecure, it can really destabilize everything else. And so with someone being very passionate about the type of community that folks

live in, housing was just an essential component to that. And Detroit in particular, we were the home or inventors of the middle class. And especially for African Americans, there was once so much opportunity for families here. And so really thinking about, how we can recreate that again?... Housing is just fundamental and it is also … that first rung on the

 You and your husband have four sons ranging in age from 13 to 23. How do you all spend your time? So interestingly, COVID brought everyone home. So we’ve gotten to spend more time than we probably otherwise would have over the last year ….We cherish these moments as much as we can, because we know we’re coming up on the end.

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RUMBLINGS

18 | CRAIN’S DETROIT BUSINESS | MAY 23, 2022

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Science center to reopen IMAX after long closure due to flooding THE MICHIGAN SCIENCE CENTER will reopen its IMAX theater in June, after a nearly yearlong closure following heavy rains last summer. The center’s lower level, including the theater, flooded last summer due to what the center said were sewer backups. The science center was forced to close for several months for remediation and restoration before partially reopening last September. Following the reopening of the IMAX, two areas of the science center are still closed: Kidstown and the DTE Sparks Energy Theater, said Elizabeth Weigandt, a spokeswoman for the science center. The restored IMAX theater includes new carpeting, drywall, electrical and lighting. The three-story theater also boasts 239 brand-new,

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The Michigan Science Center in Detroit. | MICHIGAN SCIENCE CENTER

custom-designed seats featuring FreeForm Trim technology. Donated by Magna Corp., they will provide viewers with unique visual cues like

those used by astronauts, race car drivers and pilots, the science center said in a release. The theater will reopen the morn-

ing of June 9 with a private ribbon cutting followed by a showing of “Asteroid Hunters,” a deep-space look at asteroids, their cosmic origins and the potential threat they pose to our world. The theater will open to members June 11 and the general public June 15. The IMAX theater is a significant draw for patrons and source of earned revenue for the center, which held on largely with foundation support last year as the pandemic continued to restrict visitor numbers. A related lawsuit filed by the science center’s insurance company to fight payout on the water damage and lost revenue claims was resolved last month but was not tied to the reopening of the IMAX, Weigandt said.

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